California Gasoline Strengthens on February Trading, Fuel Switch

Spot gasoline in California strengthened against futures after the prompt-month contract rolled into February and before a Kinder Morgan Energy Partners (KMP) pipeline switches to more stringent fuel requirements.

California-blend gasoline, or Carbob, in Los Angeles gained 4 cents to a discount of 1.5 cents a gallon against the March gasoline futures contract traded on the New York Mercantile Exchange at 1:23 p.m. East Coast time. Before today, the fuel traded against February Nymex futures.

Kinder Morgan, in a manual posted on its website, said the Reid vapor pressure, a measure of how quickly fuels evaporate, drops to 5.99 RVP from 12.5 RVP in the second cycle of February for products delivered on the West and San Diego pipeline systems in California.

Chevron Corp. (CVX), Tesoro Corp. (TSO) and BP Plc (BP/) are performing maintenance on production units at refineries in Southern California. Exxon Mobil Corp. (XOM) will shut equipment at the 150,000-barrel-a-day Torrance plant in the first week of March for a scheduled turnaround, a person with knowledge of the plans said Nov. 12.

The discount for Carbob in San Francisco, which is also trading for February, narrowed 10.5 cents to a discount of 12.5 cents a gallon against futures, the highest level since Jan. 9.

San Francisco Carbob narrowed its discount to Los Angeles by 6.5 cents to 11 cents a gallon, the smallest gap since Jan. 8. It weakened to a record 32.5 cents a gallon below Los Angeles on Jan. 14.

California-blend, or CARB, diesel in Los Angeles weakened 1.25 cents to a 6.25-cent-a-gallon premium to Nymex heating oil futures. The same fuel in San Francisco was unchanged at a premium of 2.5 cents a gallon against futures.

In Portland, low-sulfur diesel narrowed its discount 2.5 cents to 6.5 cents a gallon against heating oil futures. Conventional, 84-octane gasoline there strengthened 1.5 cents to 21.5 cents a gallon below the Nymex gasoline contract.

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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