Dec. 10 (Bloomberg) -- Conventional gasoline on the Gulf Coast declined to the biggest discount to futures in 21 years as refineries increased production.
Gross inputs of oil to refineries on the Gulf Coast climbed to 8.3 million barrels a day in the week ended Nov. 30, the highest level since at least 1992, the Energy Department reported Dec. 5. Valero Energy Corp. started a new hydocracker at its Port Arthur, Texas, plant. The unit will produce about 24,000 barrels a day more gasoline and blendstocks, according to a company presentation.
Conventional 87-octane gasoline on the Gulf Coast dropped 6.25 cents to a discount of 29.5 cents a gallon to futures on the New York Mercantile Exchange at 3:43 p.m., the lowest level since Bloomberg began assessing the grade in May 1991. The fuel has traded at a discount to Nymex futures since Oct. 15.
“Refiners have returned from maintenance, increasing the supply of gasoline at a time of year when demand declines,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “As a result, I would expect that inventories will rise this week several million barrels.”
Ultra-low-sulfur diesel in the Gulf slid 1.38 cents to a discount of 1.13 cents a gallon to Nymex heating oil futures.
Valero said in its third-quarter earnings report it expected the hydrocracker at its 310,000-barrel-a-day Port Arthur, Texas, refinery to be operational this month.
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