Gulf Coast Diesel Gains as Distillate Inventories Decline

Diesel fuel in the U.S. Gulf Coast gained for the first time in three days as distillate inventories in the region slumped to a 10-week low.

Gulf Coast stockpiles of heating oil and diesel declined by 1.33 million barrels to 35.7 million in the week ended March 8, the lowest level since Dec. 28, Energy Information Administration data showed today.

Ultra-low-sulfur diesel on the Gulf strengthened 0.25 cent to 7.75 cents a gallon above heating oil futures on the New York Mercantile Exchange at 1:55 p.m., according to data compiled by Bloomberg.

Reformulated gasoline, or RBOB, strengthened 4.5 cents to 16 cents below Nymex gasoline futures, the narrowest discount since Feb. 28, the last day of trading for the March futures contract. Conventional gasoline rose 3.5 cents to 19 cents below futures as motor fuel supplies dropped to 72.9 million from 73.4 million the week earlier, EIA data showed.

The 3-2-1 crack spread on the Gulf Coast, a measure of refining profitability for gasoline and diesel fuel based on West Texas Intermediate in Cushing, Oklahoma, dropped 39 cents to $31.30 a barrel, the third consecutive decline, according to data compiled by Bloomberg. The same spread for Light Louisiana Sweet oil retreated 4 cents to $11.45 a barrel.

Valero Energy Corp. (VLO)’s Port Arthur, Texas, refinery, which currently has a 57,000-barrel-a-day hydrocracker shut, had a different compressor trip, while Phillips 66’s Sweeny refinery continues to restart units after power issues shut down the plant on March 10, the companies said.

Gulf-Midwest Spread

The U.S. Gulf Coast-Midwest spread for diesel was 2.13 cents a gallon after ultra-low-sulfur diesel weakened in the Group 3 region, which spans from Oklahoma north to the Dakotas. The fuel weakened 2.12 cents to 9.88 cents above heating oil futures, a second consecutive decline.

Stockpiles of distillates in the Midwest, known as PADD 2, increased 1.04 million barrels to 32 million last week, the EIA reported today. That’s the highest since April 6.

The 3-2-1 crack spread in the Midwest, based on WTI, slid $1.15 to $30.68 a barrel, the lowest level since Feb. 7.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

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

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