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Chicago Gasoline Extends Slump on Supply, Exxon Joliet

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June 11 (Bloomberg) -- Chicago gasoline weakened for a sixth day, the longest streak of declines since December, on speculation inventories of the motor fuel will get a boost from the restart of Exxon Mobil Corp.’s Joliet, Illinois, refinery.

Conventional, 85-octane gasoline slid 25 cents to 25 cents a gallon above futures on the New York Mercantile Exchange at 4:15 p.m., the smallest premium since May 15, according to data compiled by Bloomberg.

The differential tightened 60 cents in six days of trading after Exxon completed maintenance at the 238,000-barrel-a-day Joliet refinery, the fifth-largest in the U.S. Midwest. The plantwide turnaround, which began April 14, shut major operating units.

The return of Joliet may boost stockpiles in the region, which Energy Information Administration data show were 152,000 barrels below the five-year seasonal average as of May 31.

“Exxon got caught in a position where maintenance may have taken longer than expected,” Patrick DeHaan, a Chicago-based gas analyst at GasBuddy.com, said by phone. “They were caught buying between when they originally thought they’d be done and what the reality was, and the market may have overreacted.”

Chicago gasoline peaked at a premium of 85 cents a gallon versus Nymex futures on June 3, the highest level in data going back to 1996.

Stockpiles of motor fuel in the Midwest, known as PADD 2, were 48.4 million barrels in the week ended May 31, after dropping to a five-month low in early May, EIA data showed.

Retail Prices

Inventory declines and reports of refinery issues including those at Citgo Petroleum Corp.’s Lemont, Illinois, plant and Phillips 66’s Wood River site have contributed to recent spikes in regional spot and retail prices, DeHaan said.

Prices at the pump averaged $4.19 a gallon in Illinois today, compared with $4.05 a week ago, according to AAA’s Daily Fuel Gauge report. Indiana averaged $4.12 a gallon, about 16 cents higher than a week before.

“Retailers will cling to their margins until they see if the downward trend is really going to stick,” DeHaan said. “Prices will follow spot basis lower in the next few days. It seems we’re pretty close to sounding the all clear.”

The 3-2-1 crack spread in Chicago, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, dropped $7.96 to $32.91 a barrel. The decline was the sixth in a row.

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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