Very strong refining margin allowed Viva Energy Group (ASX:VEA) to repair its balance sheet and helped Ampol (ASX:ALD) to delever, Jefferies said in a note on Thursday.

Retail fuel margins softened recently but may continue to rise over time. They will remain elevated for some time given ongoing crude and product supply disruptions in the Middle East as well Russia banning exports of diesel and gasoline.

Jefferies said it preferred Ampol given better execution, especially in retail. It is expected to deliver strong results in the first half in fuel and infrastructure given pre-existing hedging positions, demand pull-forward, trading and shipping earnings, and strong refining margins.

Viva Energy still needs to reset its C&M strategy despite some improvement, the note said.

The investment firm assigned Ampol a buy rating with a price target of AU$43.50 per share, and Viva Energy a hold rating with a price target of AU$2.30 per share.