U.S. Midwest Diesel Falls as Illinois Unit Reaches Planned Rates

Diesel fuel weakened in the U.S. Midwest after Citgo Petroleum Corp. returned a unit to normal operations at its Lemont, Illinois, refinery following a power failure early this month. Crack spreads narrowed.

Ultra-low-sulfur diesel in Chicago weakened 0.75 cent to a discount of 3 cents versus New York Mercantile Exchange futures at 2:37 p.m., according to data compiled by Bloomberg. The same fuel in Group 3 weakened 1.25 cents to a discount of 0.38 cent a gallon. Group 3 includes states north of Oklahoma to Minnesota and North Dakota.

The differentials swelled after Citgo said it restarted a diesel hydrotreater and returned the unit to planned rates following a June 12 power loss at the 170,500-barrel-a-day Lemont plant. Flint Hills Resources LLC was also restarting units after a power issue at its Pine Bend, Minnesota, refinery.

Exxon Mobil Corp. (XOM)’s Joliet plant and Phillips 66 (PSX)’s Wood River refinery, both in Illinois, are also operating at or near full capacity following maintenance, according to a report from Energy Analytics Group Ltd.

The increases may ease “refined product tightness” in the Midwest and “enable growth” in Gulf Coast inventories as less product is sent north, according to the report. The Midwest tightness earlier led to a “sharp increase in refined product flows from the U.S. Gulf Coast.”

Distillate Stockpiles

Stockpiles of distillate fuel in the U.S. Midwest fell to 27.3 million barrels in the week ended June 14, a second consecutive decline, according to U.S. Energy Information Administration data. Inventories fell to the lowest level since December last month, EIA data show, as refineries under went scheduled and unscheduled maintenance.

Distillate supplies were 39.4 million barrels on the U.S. Gulf Coast last week. Ultra-low-sulfur diesel was unchanged on the Gulf today at a discount of 3.13 cents a gallon.

The 3-2-1 crack spread on the Gulf, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, dropped 3 cents to $17.21 a barrel, while the same spread for Light Louisiana Sweet oil fell 13 cents to $9.31 a barrel, according to data compiled by Bloomberg.

Refinery margins in Chicago were $16.07 a barrel, compared with $18.66 in the Group 3 region.

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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