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Gulf Coast Cokers Break Even as LLS-Maya Spread Narrows Below $5

Light Louisiana Sweet crude weakened against heavier grades, making it more difficult for refiners to make money running cokers.

LLS, the benchmark light, sweet crude on the U.S. Gulf, slipped 15 cents to a premium of $4.69 a barrel over Maya crude from Mexico, at 11:48 a.m., according to data compiled by Bloomberg. The gap between the two averaged $6.34 a barrel in April, below an $11.55 mark over the past year and the lowest monthly average since January 2012.

Refineries on the Gulf Coast have built cokers to crack residual fuel oil into lighter, more valuable products, allowing them to run more of the less expensive, heavier crudes like Maya.

The shrinking spread has reduced refining margins for Gulf Coast cokers. Valero Energy Corp. (VLO)’s cokers are “breaking even,” Chief Executive Officer Bill Klesse said today during the company’s quarterly earnings call. Refineries may consider reducing coker rates and instead making asphalt, Klesse said.

“If we can make asphalt at some of our plants, like Corpus Christi, you’d make asphalt,” Klesse said. “Then you have a spare coker, so you have optionality. Then you look at your fuel oil economics, and so we would balance those as well. So yes, you could spare your coker.”

LLS widened its premium to the U.S. benchmark crude, West Texas Intermediate in Cushing, Oklahoma, by 20 cents to $10.80 a barrel. Heavy Louisiana Sweet strengthened by 35 cents to an $11.35-a-barrel premium to WTI.

Mars Blend strengthened by 5 cents to a $6.65-a-barrel premium. Poseidon weakened by 20 cents to $6.05. Southern Green widened its premium 30 cents to $5.30. Thunder Horse crude saw its premium shrink 35 cents to $8.90.

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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