Gasoline Jumps on Speculation Refinery Upsets to Reduce Supply

Gasoline jumped on speculation that supplies will be reduced by unplanned outages at refineries, including Citgo Petroleum Corp.’s site near Chicago.

Futures rose as much as 2 percent. The only crude unit at Citgo’s plant in Lemont, Illinois, may have sustained extensive damage in a fire, two people familiar with plant operations said Oct. 25. Citgo said operations were “significantly reduced.” Three Gulf Coast sites reported upsets over the weekend.

“The Lemont fire is going to be a heavy outage,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “I’m not sure the market expected that and the reaction is filtering through now.”

Gasoline for November delivery rose 4.28 cents, or 1.7 percent, to $2.6299 a gallon at 10:16 a.m. on the New York Mercantile Exchange, after falling 3.2 percent last week. Trading volume was 3.8 percent above the 100-day average.

“This is the impact of the Lemont refinery, which could be down for an extended period,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

The fluid catalytic cracker at Lemont and one side of the coker were shut as of Friday, while output at other downstream units, including hydrotreaters, is reduced, said the people, who asked not to be identified because the information isn’t public. The refinery provides gasoline and diesel to Chicago and the upper Midwest.

Gulf Coast

Valero Energy Corp. (VLO) reported surging in a wet gas compressor at its Port Arthur, Texas, refinery and a rupture in a crude unit at the Meraux plant in Louisiana. Pasadena Refining System Inc., a unit of Petroleo Brasileiro SA (PETR4), reported an upset on the fluid catalytic cracker at its refinery near Houston.

The motor fuel’s crack spread versus WTI widened $1.32 to $11.30 a barrel. The fuel’s premium to Brent gained 16 cents to $1.06 a barrel.

U.S. retail gasoline prices are the lowest this year after declining 10 straight days. Pump prices, averaged nationwide, fell 0.8 cent to $3.285 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 26.3 cents below a year ago.

Ultra-low-sulfur diesel for November delivery rose 3.42 cents, or 1.2 percent, to $2.9439 a gallon on trading volume that was 16 percent below the 100-day average. Prices fell 4.1 percent last week.

ULSD’s premium versus WTI gained $1.13 to $25.45 a barrel. The crack spread over Brent fell 1 cent to $15.23.

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.