U.S. Midwest Fuels Weakened as Marathon Prepares to Start Units

U.S. Midwest fuels weakened relative to futures as Marathon Petroleum Corp. (MPC) prepared to start two units at its Kentucky refinery.

Conventional, 85-octane gasoline, or CBOB, in Chicago slumped 2 cents to 8.5 cents a gallon below New York Mercantile Exchange futures at 2:35 p.m., the biggest discount since Aug. 20, according to data compiled by Bloomberg. Conventional, 87-grade gasoline in the U.S. midcontinent dropped 2.12 cents to a discount of 15.75 cents, the lowest level since April 8.

Ultra-low-sulfur diesel in Chicago was unchanged at 10.5 cents a gallon below futures, while midcontinent diesel slipped 2.5 cents to a discount of 6 cents, the weakest since January.

The discounts widened as Marathon’s 240,000-barrel-a-day Catlettsburg, Kentucky, plant planned to restart an ADS unit and a distillate desulfurization unit over the next two days, filings with regulators showed. The refinery processes both sweet and sour crudes, according to the company’s website.

The 3-2-1 crack spread in Chicago, a rough measure of refining margins for gasoline and diesel based on West Texas Intermediate oil in Cushing, Oklahoma, dropped $1.13 to $11.49 a barrel. The same spread in the midcontinent, known as Group 3, slipped $1.52 to $10.09 a barrel. Group 3 includes the area north of Tulsa, Oklahoma, to North Dakota and Minnesota.

The premium for California-blend gasoline, or Carbob, in Los Angeles widened 1 cent to 17 cents a gallon, a second consecutive advance. The fuel in San Francisco added 0.5 cent to a premium of 14 cents a gallon.

Conventional gasoline in Portland, Oregon, a benchmark for the U.S. Pacific Northwest, was unchanged at a discount of 10 cents a gallon, its lowest level since August. Low-sulfur diesel was unchanged in all West Coast markets.

The 3-2-1 crack spread of Alaska North Slope crude, Carbob in Los Angeles and state-grade diesel in Los Angeles narrowed by 83 cents to $15.30 a barrel.

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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