U.S. Gulf Coast gasoline and diesel strengthened after the nation’s largest refinery shut a unit, adding to plant outages in the region amid a forecast for increased exports.
Conventional, 85-octane gasoline, or CBOB, on the Gulf Coast gained 1.75 cents to 18.25 cents a gallon under New York Mercantile Exchange futures at 1:27 p.m., the smallest discount since July 31. Ultra-low-sulfur diesel gained 0.13 cent to 3.5 cents a gallon under ULSD futures.
Motiva Enterprises LLC said it shut a unit at its 600,000-barrel-a-day Port Arthur, Texas, refinery, the largest in the U.S. Petroleo Brasileiro SA also idled a fluid catalytic cracker at the 106,500-barrel-a-day Pasadena, Texas, plant, after a temperature issue, the company reported Aug. 10.
The shutdown of units could tighten supplies of gasoline and diesel along the Gulf, the center for U.S. exports, and contribute to the strengthening of prices as refiners may need to purchase fuel to meet commitments.
Shipbroker Charles R. Weber Co. forecast Medium-Range tanker fixtures in the Gulf of Mexico will increase in the week ended Aug. 9.
Analysts at Petromatrix and JBC Energy also estimated Europe, a consumer of U.S. diesel, will reduce refinery runs amid declining margins and because of seasonal maintenance.
“Motiva is an issue because if the European Union is cutting runs then we’re going to have tight distillate supply and good demand,” said Houston-based Carl Larry, president of Oil Outlooks & Opinions, LLC.
Distillate inventories on the Gulf Coast were 41.7 million barrels in the week ended Aug. 2, 5.4 percent below the average of the past five years, according to U.S. Energy Information Administration data. Gasoline stockpiles were 77.2 million barrels during the same time period.
The 3-2-1 crack spread on the Gulf Coast, a rough measure of refining margins for gasoline and diesel fuel based on West Texas Intermediate in Cushing, Oklahoma, widened $1.97 to $13.36 a barrel, a highest since Aug. 1, according to data compiled by Bloomberg. The same spread based on Light Louisiana Sweet oil swelled $1.57 to $7.71 a barrel, a one-week high.