Chicago Gasoline Weakens to 34-Month Low on Shut Sunoco Pipeline

Gasoline in Chicago weakened to the lowest level in 34 months after federal regulators ordered that a Sunoco Logistics Partners LP (SXL) pipeline in Ohio remain shut following a Jan. 12 spill.

The 8-inch pipeline, which carries products from Fostoria to Hudson in Ohio, must remain shut until Sunoco Logistics complies with a corrective action order following a 116,760- gallon gasoline spill, according to the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.

PBF Energy Inc. (PBF) is operating the Toledo (SUTOCRUD) refinery in Ohio at reduced rates of 130,000 to 140,000 barrels a day because of low gasoline demand, a person with knowledge of the situation said today.

“If they try to place those extra barrels, it’s going to be 10 cents cheaper,” Steve Mosby, vice president of ADMO Energy LLC, a supply consultant in Kansas City, Missouri, said in an telephone interview. “That’s the nature of Chicago. There’s a lot of barrels there because it’s all refineries.”

Conventional, 87-octane gasoline in Chicago sank to a discount of 30 cents a gallon versus futures traded on the New York Mercantile exchange at 2:41 p.m., the lowest level since March 2009, according to data compiled by Bloomberg. Prompt- delivery (CHOR87PC) of the fuel fell 4.06 cents to $2.4852 a gallon.

“The shutdown of the pipeline has had an impact on a few of the terminals we utilize off that line,” said Mike Gayda, a Parsippany, New Jersey-based spokesman and president at PBF Energy. “We have redirected some of our customers to terminals nearby where we have supply.”

Midwest Inventories

Gasoline inventories in the Midwest, known as the Padd 2 region, rose 2.3 percent last week to 54.7 million barrels, the Energy Department reported yesterday. Supplies have climbed six of the past seven weeks to the highest level since Feb. 25.

Conventional 87-octane gasoline in the Midwest (GRP3G387) fell 0.5 cent to a discount of 22 cents.

The same fuel in the Gulf Coast (MOSGC87P) fell for the third straight day, by 0.75 cent to a discount of 3 cents to futures. That’s the lowest level for the fuel in seven days.

Gasoline in the New York Harbor slipped 0.17 cent to a premium of 2.38 cents a gallon against futures. Hovensa LLC, a partnership of Hess Corp. (HES) and Petroleos de Venezuela SA, announced Jan. 18 that the St. Croix (HOSCCRUD) refinery in the U.S. Virgin Islands will shut because of weak demand.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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