West Texas Sour Weakens as Refinery Maintenance Strands Crude

West Texas Sour crude weakened relative to the U.S. benchmark as refinery maintenance along the U.S. Gulf Coast reduced demand for Permian Basin oil.

WTS, a low-density, high-sulfur grade, fell 45 cents to a $1.80-a-barrel discount to West Texas Intermediate in Cushing, Oklahoma, at 4 p.m., according to data compiled by Bloomberg.

“I think it is a reflection of growing supplies on the Gulf Coast, which is entering its fall maintenance season and backing volumes into the Permian Basin,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Flint Hills Resources LLC, Exxon Mobil Corp. (XOM) and Motiva Enterprises LLC are among companies said to be planning maintenance in October on plants in Texas and Louisiana with a combined capacity to process more than 2.3 million barrels of crude a day.

West Texas Intermediate in Midland also weakened relative to its counterpart in Cushing, falling 10 cents to a discount of 65 cents a barrel.

Crude from the Permian Basin, the largest oil field in the U.S., has been connected to the Gulf Coast by pipelines that came online this year from Magellan Midstream Partners LP (MMP) and Sunoco Logistics Partners LP. (SXL)

Valero Energy Corp. (VLO) will shut a fluid catalytic cracker at its 100,000-barrel-a-day Three Rivers refinery in Texas for six weeks of work in October, the company announced in July.

Other Work

Flint Hills’ 305,000-barrel-a-day Corpus Christi refinery in Texas will conduct maintenance on a fluid catalytic cracker this month, a person familiar with the plans said Dec. 20.

Petrobras’ Pasadena plant near Houston, which has a capacity of 106,500 barrels a day, shut both of its alkylation units for planned work about Sept. 20, a person familiar with the maintenance said Dec. 21.

Delek US Holdings Inc. (DK) has four weeks of work on an alkylation unit at the 60,000-barrel-a-day refinery in Tyler, Texas, scheduled for this month, the company said on a March 7 earnings call.

Phillips 66 (PSX) is performing maintenance at its Lake Charles, Louisiana, refinery, which has a 235,000-barrel-a-day capacity, according to Rich Johnson, a company spokesman in Houston.

Marathon Petroleum Corp. (MPC)’s 522,000-barrel-a-day Garyville refinery in Louisiana will shut a crude unit and a coker this month for a turnaround that’s expected to last about 30 days, a person with knowledge of the schedule said Jan. 29.

Motiva plans 63 days of maintenance on sulfur recovery unit No. 5 between Sept. 3 and Nov. 5 at the 255,000-barrel-a-day Convent refinery in Louisiana, a filing with a state regulator shows.

Motiva’s refinery in Norco, Louisiana, is planning a residual catalytic cracker and alkylation unit turnaround this month, according to notices to state regulators. That plant has a capacity of 250,000 barrels a day.

Exxon planned to do six to eight weeks of work related to a crude unit at its 503,500-barrel-a-day Baton Rouge refinery in Louisiana starting last month, a filing with the state said.

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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