Gulf Diesel Rises on Biggest Inventory Drop Since April

Diesel fuel gained for a second day on the U.S. Gulf Coast as the area’s distillate inventories dropped the most since April.

Supplies of distillates, including heating oil and diesel in PADD 3, declined 2.65 million barrels, or 7.2 percent, to 34 million in the week ended Dec. 14, the largest percentage retreat since April 20, according to Energy Department data. U.S. exports of the fuel oil grew 37,000 barrels to 1.06 million barrels a day, the data showed.

Ultra-low-sulfur diesel’s discount narrowed 1.88 cents to to 6 cents below heating oil futures on the New York Mercantile Exchange at 3:45 p.m. Diesel shipments from the U.S. Gulf Coast to Europe were poised to gain in the two weeks ending tomorrow, according to a shipbroker survey.

“We continue to export more than a million barrels a day so that, combined with domestic consumption, is keeping it tight,” Kyle Cooper, director of commodities research at IAF Advisors, said in a phone interview from Houston today. “Distillate will remain the strongest of the energy complex and really will bounce around this type of price range. It seems comfortable.”

Traders and oil companies booked a total of six tankers to load diesel fuel in the fourteen days ended Dec. 20, and another four were forecast to be hired, the median estimates in a survey of six shipbrokers who specialize in the trade showed. Each tanker would normally haul about 38,000 metric tons of diesel, or 285,000 barrels.

Motiva Repairs

Gulf gasoline advanced for a third day as Motiva Enterprises LLC conducted maintenance at a 325,000-barrel-a-day crude unit at its Port Arthur, Texas, refinery and after a report indicated motor fuel shipments to the U.S. will decline.

The Port Arthur refinery, which is the largest plant on the U.S. Gulf Coast, expects to complete repairs and try to restart the crude unit by Dec. 23, a person familiar with operations said. Traders will book 22 percent fewer oil tankers to ship European gasoline to the U.S. in the next two weeks, a Bloomberg survey of five shipbrokers and one trader said today.

Conventional gasoline to be blended with ethanol, or CBOB, gained 4.75 cents to 19.75 cents a gallon below Nymex futures in New York, the narrowest gap since Dec. 4. Reformulated gasoline rose 5.25 cents to 17.75 cents below futures.

“Motiva restart being delayed is probably the issue for gasoline today,” Cooper said.

Motiva Refinery

Motiva will make a second attempt to have a clamp made and applied to contain a leak on the crude unit’s heater outlet that led to fires Dec. 11 and Dec. 17, said the person, who declined to be identified because the information isn’t public. At full rates, the refinery can make 240,000 barrels a day of gasoline and 190,000 barrels of diesel, according to Motiva.

The crude unit will be placed on partial circulation while maintenance is conducted to resolve the leak, Kimberly Windon, a Houston-based spokeswoman for the refinery, said yesterday in an e-mail.

Motiva is a refining and marketing joint venture of Saudi Refining Inc., a subsidiary of Saudi Arabian Oil Co., and Shell Oil Co., a unit of Royal Dutch Shell Plc.

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