San Francisco Diesel Rises to Record on 7-Year Supply Low

Spot diesel in San Francisco rose to the highest level against futures since at least 2007 after inventories of the fuel in California dropped.

California-blend, or CARB, diesel inventories tumbled 15 percent, or 303,000 barrels, to 1.75 million in the week ended Aug. 24, the state Energy Commission said by e-mail. That’s the lowest level since August 2005 and the third weekly decline.

CARB diesel in San Francisco gained 3.5 cents to 33 cents a gallon above heating oil futures on the New York Mercantile Exchange at 4:38 p.m. East Coast time, data compiled by Bloomberg show. That’s the highest premium for the fuel since Bloomberg began assessing prices there in November 2007.

Tesoro Corp. (TSO)’s 170,000-barrel-a-day Golden Eagle refinery in Northern California cut diesel output last week after a compressor failure at a hydrodesulfurization unit, a person with direct knowledge of the upset said Aug. 21. The plant will have to run at reduced capacity until new equipment can be installed in the unit, said the person, who asked not to be identified because the information isn’t public.

The refinery is performing “unspecified maintenance,” and the company is meeting product supply commitments, Tina Barbee, a spokeswoman at Tesoro’s headquarters in San Antonio, said by e-mail earlier today.

CARB diesel in Los Angeles advanced 3 cents to 30.5 cents a gallon above Nymex heating oil futures, the highest level in more than nine months.

Richmond Refinery

Chevron Corp. (CVX) has been producing fuels at a reduced capacity at the 240,000-barrel-a-day Richmond refinery, the largest in Northern California, since an Aug. 6 fire shut the plant’s only crude unit.

Royal Dutch Shell Plc (RDSA)’s 158,000-barrel-a-day Martinez refinery yesterday reported a planned shutdown of the flexicoker, which converts heavy hydrocarbons into lighter oil products, a filing with the Contra Costa County hazardous materials division shows. Kayla Macke, a Shell spokeswoman in Houston, didn’t return an e-mailed request for comment on the shutdown yesterday.

California-blend gasoline, or Carbob, in Los Angeles fell for the second day, losing 3 cents to 22 cents a gallon above Nymex gasoline futures. That’s the lowest premium for the fuel in four days. Carbob in San Francisco slipped 2 cents to 24 cents a gallon over futures for the third consecutive decline.

Golden Eagle

Tesoro’s Golden Eagle refinery started an alkylation unit, which makes a high-octane, gasoline-blending component, yesterday, a filing with the Contra Costa County hazardous materials division shows. The plant reported a “small leak” of spent acid or hydrocarbons from the unit on Aug. 26, a separate filing to the county shows.

California-blend gasoline, or Carbob, supplies rose 254,000 barrels, or 4.8 percent, to 5.5 million in the week ended Aug. 24, the state said. That’s the highest inventory level since the week ended March 30. Production of the fuel slipped 1.9 percent last week to 6.42 million barrels, the state said.

Conventional, 87-octane gasoline in Portland, Oregon, jumped 23 cents to a premium of 27 cents a gallon after the fuel began to be priced against October futures instead of the September contract. Low-sulfur diesel in Portland increased 1.5 cents to 26.5 cents a gallon above heating oil futures.

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