May 29 (Bloomberg) -- Gasoline in the U.S. Midwest extended losses for a second day, weakening the most in a month, on speculation more motor fuel is arriving in the region after Magellan Midstream Partners LP lifted allocation programs.
Magellan removed yesterday several terminals in the central region of its pipeline system from its “N-grade” allocation program, which began May 16 because of stronger-than-normal demand, said Bruce Heine, a company spokesman. A company allocates shipments when demand on a pipeline exceeds that line’s capacity.
“Our N-grade-87-octane gasoline inventory is improving at this moment,” said Heine, who is based in Tulsa, Oklahoma.
The premium for 87-octane gasoline in Group 3, which includes states north of Tulsa to Minnesota and North Dakota, weakened 5 cents to 8 cents a gallon versus futures on the New York Mercantile Exchange. The differential has narrowed from a record premium of 64 cents this month.
Supplies in the U.S. Midwest, known as PADD 2, dropped 159,000 barrels to 47.6 million barrels in the week ended May 17, according to Energy Information Administration data. That’s also the lowest level for this time of year since 2009.
Regional stockpiles declined as refineries including Exxon Mobil Corp.’s Joliet, Illinois, plant conducted planned turnarounds. Unplanned maintenance at CVR Energy Inc.’s Wynnewood, Oklahoma, plant may have also exacerbated supplies.
The 3-2-1 crack spread in Group 3, a rough measure of refining margins based on West Texas Intermediate in Cushing, Oklahoma, fell $1.75 to $28.42 a barrel, the lowest level in three weeks, according to data compiled by Bloomberg.
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