San Francisco Diesel at Record High as Shell Plans to Shut Unit

Spot diesel in San Francisco rose for a fourth day to reach the highest premium to futures since at least 2007 as Royal Dutch Shell Plc (RDSA) was said to plan shutting the flexicoker at its Martinez refinery.

Shell will take the unit offline for three weeks starting Sept. 4 for planned maintenance, a person familiar with the work said. Shell reported a planned shutdown of the unit in an Aug. 28 filing with county regulators. The company did not return a message on its media phone line for comment.

Flexicokers convert heavy hydrocarbons such as residual oil into lighter products. The Martinez refinery’s flexicoker can process 22,500 barrels of feedstock a day, according to data compiled by Bloomberg.

California-blend, or CARB, diesel in San Francisco gained 2 cents to a premium of 36 cents a gallon more than heating oil futures traded on the New York Mercantile Exchange at 4:09 p.m. New York time, data compiled by Bloomberg show. That’s the highest differential for the fuel since Bloomberg began assessing prices there in November 2007.

CARB diesel in Los Angeles fell 4 cents to 29 cents a gallon above Nymex heating oil futures.

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.

Shut Production

Phillips 66 (PSX) shut production from its coker at the Rodeo refinery Aug. 29 after a small fire in the unit the day before, a person with direct knowledge of the incident said at the time. The unit was expected to run at 50 percent of capacity yesterday and at full rates by the end of the week.

Tesoro Corp. (TSO)’s 170,000-barrel-a-day Golden Eagle refinery also cut diesel output last week after a compressor failure at a hydrodesulfurization unit, a person with direct knowledge of the upset said Aug. 21.

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.

California-blend gasoline, or Carbob, in San Francisco gained 3.5 cents to 29 cents a gallon above Nymex gasoline futures. The same fuel in Los Angeles rose 3.5 cents to 28 cents a gallon over futures.

Conventional, 87-octane gasoline in Portland, Oregon, jumped 5 cents to a premium of 40 cents a gallon above Nymex gasoline futures. Low-sulfur diesel in Portland increased 4.5 cents to 35 cents a gallon above heating oil futures.

To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net

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

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