U.S. Midcontinent Gasoline Gains as Supplies Drawn to Texas

U.S. Midcontinent gasoline climbed to a 12-week high relative to New York futures as buyers from Texas purchased more of the fuel.

Gasoline in Group 3, the region spanning north from Tulsa, Oklahoma to Minnesota and North Dakota, was 8.39 cents a gallon below the same fuel on the U.S. Gulf Coast, according to data compiled by Bloomberg. That gap has attracted distributors in Texas, according to Ryan Mossman, vice president and general manager of FuelQuest Inc., a fuel management company.

“The Group 3 is at a pretty decent discount to the Gulf,” said Mossman, who is based in Houston. “We may be moving fuel from Little Rock down to Dallas or further south to the Gulf Coast. Product is definitely being pulled from the group.”

Conventional, 87-octane gasoline in Group 3 climbed 0.63 cent to 18 cents a gallon below futures on the New York Mercantile Exchange at 12:50 p.m., the strongest level since Oct. 17, according to data compiled by Bloomberg. The differential reached a record discount of 45.5 cents a gallon on Dec. 3.

In 2013, Group 3 gasoline averaged a premium of 3.56 cents a gallon to the the Gulf Coast. The fuel may also have rallied as Delek US Holdings Inc. (DK) began a scheduled maintenance shutdown this week at its El Dorado, Arkansas, refinery.

Turnarounds

A 38-day turnaround that would allow the refinery to process 10,000 barrels a day more of light crude oil was set to begin Jan. 4, Frederec Green, executive vice president for Delek, said in a third-quarter earnings call with investors.

The 3-2-1 crack spread in Group 3, a rough measure of refining margins for gasoline and diesel based on West Texas Intermediate oil in Cushing, Oklahoma, rose 14 cents to $17.18 a barrel, according to data compiled by Bloomberg.

Gasoline rallied to a nine-week high on the U.S. Gulf Coast as refineries were expected to begin maintenance, cutting production along the U.S. refining hub.

Valero Energy Corp. (VLO)’s Texas City, Texas, plant was scheduled to bring down an alkylation unit for repairs beginning Jan. 1, while Citgo Petroleum Corp. has work planned for a fluid catalytic cracker at its Lake Charles, Louisiana, refinery this month, according to people familiar with operations.

Gasoline production along the U.S. Gulf Coast added 40,000 barrels a day to 2.1 million barrels a day in the week ended Jan. 3, according to the U.S. Energy Information Administration.

Conventional, 87-octane gasoline on the U.S. Gulf Coast added 0.5 cent to a discount of 9.5 cents to Nymex futures, a seven-week high, according to data compiled by Bloomberg. Conventional CBOB gasoline climbed 1 cent to 11 cents a gallon below futures.

The 3-2-1 crack spread on the Gulf Coast, based on WTI oil, added $1 to $20.10 a barrel, a fourth consecutive advance. The same spread based on Light Louisiana Sweet oil, the U.S. Gulf Coast benchmark, rose 60 cents to $12.80.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to 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.