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Gasoline Jumps on Speculation Refinery Upsets to Reduce Supply

Oct. 28 (Bloomberg) -- Gasoline jumped the most in two weeks on speculation that supplies will be reduced by unplanned outages at refineries, including Citgo Petroleum Corp.’s site near Chicago.

Futures rose 1.7 percent. The only crude unit at Citgo’s plant in Lemont, Illinois, may have sustained extensive damage in a fire, two people familiar with the situation said Oct. 25. Citgo said operations were “significantly reduced.” A fluid catalytic cracker is shut at a Pennsylvania refinery and three Gulf Coast sites reported upsets over the weekend.

“The Lemont fire is going to be a heavy outage,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “I’m not sure the market expected that and the reaction is filtering through now.”

Gasoline for November delivery rose 4.38 cents to settle at $2.6309 on the New York Mercantile Exchange, after falling 3.2 percent last week. Trading volume was 12 percent below the 100-day average at 3:16 p.m.

“This is the impact of the Lemont refinery, which could be down for an extended period,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

The fluid catalytic cracker at Lemont and one side of the coker were shut as of Friday, while output at other downstream units, including hydrotreaters, is reduced, said the people, who asked not to be identified because the information isn’t public. The refinery provides gasoline and diesel to Chicago and the upper Midwest.

Gulf Coast

Valero Energy Corp. reported surging in a wet gas compressor at its Port Arthur, Texas, refinery and a rupture in a crude unit at the Meraux plant in Louisiana. Pasadena Refining System Inc., a unit of Petroleo Brasileiro SA, reported an upset on the fluid catalytic cracker at its refinery near Houston.

The fluid catalytic cracker at Delta Air Lines Inc.’s Monroe Energy LLC subsidiary’s Trainer, Pennsylvania, refinery will be shut for 48 hours to 60 hours, Adam Gattuso, a spokesman for the refinery, said today.

The unplanned outages come when fuel output is already reduced during scheduled fall maintenance. Refinery utilization in the week ended Oct. 18 was 85.9 percent, the lowest since April.

“We’re still probably a few more weeks in the planned maintenance period,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “That and the rash of unplanned outages is giving a boost to the cracks and to products.”

Crack Spreads

The motor fuel’s crack spread versus WTI widened 97 cents to $10.95 a barrel. The fuel’s premium to Brent fell 88 cents to 2 cents a barrel.

U.S. retail gasoline prices are the lowest this year after declining 10 straight days. Pump prices, averaged nationwide, fell 0.8 cent to $3.285 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 26.3 cents below a year ago.

Ultra-low-sulfur diesel for November delivery rose the most in two months, climbing 5.47 cents, or 1.9 percent, to $2.9644 a gallon on trading volume that was 2.9 percent above the 100-day average. Prices fell 4.1 percent last week.

ULSD’s premium over WTI gained $1.49 to $25.82 a barrel. The spread versus Brent fell 36 cents to $14.89.

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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