U.S. Gulf Coast gasoline strengthened to a one-week high on speculation refiners may begin to cut back on processing amid declining profit margins.
Conventional, 85-octane gasoline, or CBOB, on the Gulf gained 4.75 cents to a discount of 16.75 cents a gallon versus New York Mercantile Exchange futures at 11:49 a.m., the strongest level since Sept. 3. Conventional, 87-octane fuel added 4.37 cents to 11.88 cents below futures.
Refiners along the U.S. Gulf Coast, known as PADD 3, may reduce runs after margins, as represented by the premium of spot gasoline and diesel over crude, sank to the lowest level since March. Some plants are also preparing to shut for seasonal maintenance.
“There’s talk about run cuts,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
Area refiners processed 8.24 million barrels a day of crude oil in the week ended Sept. 6, a U.S. Energy Information Administration report showed today.
That may drop in coming weeks as Citgo Petroleum Corp. and Exxon Mobil Corp. (XOM) plan to carry out maintenance at refineries in Corpus Christi, Texas, and Baton Rouge in Louisiana. The two plants have a combined capacity of 668,500 barrels a day, according to data compiled by Bloomberg.
The 3-2-1 crack spread on the Gulf Coast, a rough measure of refining margins for gasoline and diesel based on West Texas Intermediate oil in Cushing, Oklahoma, advanced $1.01 to $6.64 a barrel, snapping an eight-day decline, according to data compiled by Bloomberg. The same spread based on Light Louisiana Sweet oil added $1.11 to $4.99 a barrel.
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