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U.S. Midwest Fuels Weakened as Marathon Prepares to Start Units

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Oct. 17 (Bloomberg) -- U.S. Midwest fuels weakened relative to futures as Marathon Petroleum Corp. prepared to start two units at its Kentucky refinery.

Conventional, 85-octane gasoline, or CBOB, in Chicago slumped 2 cents to 8.5 cents a gallon below New York Mercantile Exchange futures at 2:35 p.m., the biggest discount since Aug. 20, according to data compiled by Bloomberg. Conventional, 87-grade gasoline in the U.S. midcontinent dropped 2.12 cents to a discount of 15.75 cents, the lowest level since April 8.

Ultra-low-sulfur diesel in Chicago was unchanged at 10.5 cents a gallon below futures, while midcontinent diesel slipped 2.5 cents to a discount of 6 cents, the weakest since January.

The discounts widened as Marathon’s 240,000-barrel-a-day Catlettsburg, Kentucky, plant planned to restart an ADS unit and a distillate desulfurization unit over the next two days, filings with regulators showed. The refinery processes both sweet and sour crudes, according to the company’s website.

The 3-2-1 crack spread in Chicago, a rough measure of refining margins for gasoline and diesel based on West Texas Intermediate oil in Cushing, Oklahoma, dropped $1.13 to $11.49 a barrel. The same spread in the midcontinent, known as Group 3, slipped $1.52 to $10.09 a barrel. Group 3 includes the area north of Tulsa, Oklahoma, to North Dakota and Minnesota.

The premium for California-blend gasoline, or Carbob, in Los Angeles widened 1 cent to 17 cents a gallon, a second consecutive advance. The fuel in San Francisco added 0.5 cent to a premium of 14 cents a gallon.

Conventional gasoline in Portland, Oregon, a benchmark for the U.S. Pacific Northwest, was unchanged at a discount of 10 cents a gallon, its lowest level since August. Low-sulfur diesel was unchanged in all West Coast markets.

The 3-2-1 crack spread of Alaska North Slope crude, Carbob in Los Angeles and state-grade diesel in Los Angeles narrowed by 83 cents to $15.30 a barrel.

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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