Gulf Gasoline Slides as Refiners Process Most This Year

U.S. Gulf Coast gasoline weakened as area refineries processed the most crude since December, boosting fuel production.

Refiners along the Gulf increased runs by 2.7 percent in the week ended May 10 to 8.14 million barrels a day, the most since Dec. 14, according to U.S. Energy Information Administration data released today. That sent area stockpiles up 1.78 million barrels to 74.4 million.

Operations increased as Valero Energy Corp.’s Meraux, Louisiana, plant, and Phillips 66’s Borger, Texas, refinery finished planned work. The two plants can process a combined 281,000 barrels a day, according to data compiled by Bloomberg.

The discount for conventional, 85-octane gasoline, or CBOB, on the Gulf Coast weakened 0.25 cent to 17.5 cents a gallon below New York Mercantile Exchange futures at 4:12 p.m. Reformulated gasoline, or RBOB, decreased 0.5 cent to a premium of 2.75 cents a gallon, according to data compiled by Bloomberg.

The 3-2-1 crack spread on the Gulf Coast, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, widened 94 cents to $22.97 a barrel. The same spread for Light Louisiana Sweet oil slid 46 cents to $12.67 a barrel.

Gulf Coast gasoline sank to 71.62 cents a gallon below fuel in Group 3, which includes states north of Tulsa, Oklahoma to Minnesota and North Dakota.

Midwest Gains

Conventional spot gasoline in Group 3 rallied for a third day, gaining 12 cents to a premium of 62.5 cents to Nymex futures, the highest level in data compiled by Bloomberg dating back to 1990. The differential widened after a government report showed area inventories slumped for a fourth week and refinery operations dropped to the lowest level since November 2009.

Stockpiles of motor fuel in the region, known as PADD 2, dropped 898,000 barrels, or 1.8 percent, to 47.8 million last week, according to EIA data. Refineries processed 3 million barrels of crude and other feedstock, 6 percent less a week earlier.

Exxon Mobil Corp.’s Joliet, Illinois, refinery and BP Plc’s Whiting, Indiana, plant are among sites undergoing maintenance.

Explorer Pipeline Co.’s pipeline, which transports gasoline, diesel and jet fuel from the Gulf Coast to the Midwest, is experiencing delays this month. That may also be contributing to strength in the market, according to Steve Mosby, vice president of supply consultant ADMO Energy LLC in Kansas City, Missouri.

The 3-2-1 crack spread in Group 3, based on WTI, gained $4.01 to $44.56 a barrel.

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