(Corrects most to lowest level in first paragraph.)
U.S. Gulf Coast gasoline strengthened versus futures in New York while crack spreads narrowed to the lowest level in more than 17 months.
The discount for conventional, 85-octane Gulf gasoline shrank by 0.75 cent to 21.25 cents a gallon below futures on the New York Mercantile Exchange at 12:03 p.m., rebounding from the lowest level since May 24, data compiled by Bloomberg show.
The 3-2-1 crack spread on the Gulf Coast, a rough measure of refining margins for gasoline and diesel fuel based on West Texas Intermediate oil in Cushing, Oklahoma, slid $1.76 to $18.88 a barrel at 1:42 p.m., the smallest differential since January 2012, according to data compiled by Bloomberg. The same spread based on Light Louisiana Sweet oil fell $1.43 to $10.48.
The differentials narrowed after the Energy Information Administration said Gulf Coast refiners processed 8.15 million barrels a day of crude in the week ended June 14. That’s about 91 percent of area capacity and the highest level since Dec. 14, according to EIA data.
“When you get up that high, refiners are really very close to running at maximum capacity and cracks start to deteriorate,” Tom Finlon, director of Energy Analytics Group Ltd., said by phone from Jupiter, Florida. The return of refineries in the Midwest, or PADD 2, may also be pressuring cracks, he said.
Phillips 66 (PSX) said today that there is no planned maintenance under way at the Wood River, Illinois, plant. Rich Johnson, a company spokesman, said June 6 that scheduled work was being carried out on unspecified units.
Exxon Mobil Corp. (XOM)’s Joliet, Illinois, refinery this month returned from a plantwide turnaround that began in April, while BP Plc (BP/) was said to be completing maintenance at the Whiting, Indiana, plant.
“PADD 2 refineries coming back means gasoline production will go way up,” Finlon said. “That should narrow cracks.”
Refiners in the U.S. Midwest processed 3.21 million barrels a day of crude last week, the most since May 3, according to EIA data. Gasoline inventories in the area climbed 507,000 barrels to 49.8 million during the same time period.
Conventional gasoline, or CBOB, in Chicago gained 10.5 cents to 21.5 cents under futures on the Nymex, one day after reaching the biggest discount since March 1, according to data compiled by Bloomberg.
The 3-2-1 crack spread in the region widened $2.03 to $16.94 a barrel, the first increase in five days.
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