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Chicago Diesel Slumps to 21-Month Low Before Lemont Restart

Chicago diesel slid to a 21-month low relative to futures as Citgo Petroleum Corp.’s Lemont, Illinois, refinery prepared to start a unit and add to production in the U.S. Midwest.

Ultra low sulfur diesel in Chicago fell 5.5 cents to a discount of 24.5 cents a gallon against futures at 2:34 p.m. on the New York Mercantile Exchange, the weakest level since April 18, 2012, according to data compiled by Bloomberg.

The state of Illinois said Citgo submitted a restart plan for a vacuum distillation unit at the 170,500-barrel-a-day Lemont refinery. The plant plans to begin pre-start procedures on Jan. 29, said Scott Mulford, a spokesman for the Illinois attorney general’s office.

Restart of the unit, which has been shut since an Oct. 23 fire, may add to diesel production in the U.S. Midwest, known as PADD 2. PBF Energy Inc. (PBF)’s Toledo, Ohio, refinery was expected this week to start a hydrocracker that shut for eight to 12 days of maintenance around Jan. 13.

Regional output of distillate fuel, including heating oil and diesel, fell 120,000 barrels a day to 997,000 barrels in the week ended Jan. 10, according the Energy Information Administration.

Citgo’s Lemont refinery produces several grades of gasoline, diesel, jet fuel and hydrocarbon solvents, according to the company’s website. The Toledo plant processes a slate of light, sweet crudes from Canada, the U.S. Midwest, the Bakken region and U.S. Gulf Coast.

Ultra low sulfur diesel in the Midcontinent, or Group 3 region, the area north of Tulsa, Oklahoma, to Minnesota and North Dakota, dropped 1.5 cents to 15.5 cents a gallon under Nymex futures, the lowest level in data going back to 2006.

The 3-2-1 crack spread in the Group 3 area, a rough measure of refining margins for gasoline and diesel based on West Teas Intermediate oil in Cushing, Oklahoma, dropped $1.04 to $15.18 a barrel. The same spread in Chicago also declined $1.04, to $13.78 a barrel, according to data compiled by Bloomberg.

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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