Gulf Gasoline Falls on Alon Krotz Springs, Valero Plant

U.S. Gulf Coast gasoline weakened versus New York futures as Alon USA Energy Inc. restarted a unit at Krotz Springs, Louisiana, and Valero Energy Corp. neared completion of work at a Texas site.

Conventional, 85-octane gasoline, or CBOB, in the Gulf slid 1.75 cents to 16 cents a gallon below futures at 12:44 p.m. on the New York Mercantile Exchange. Reformulated gasoline, or RBOB, dropped 1.25 cents to a discount of 1 cent.

The differentials widened after Alon’s 83,000-barrel-a-day Krotz Springs plan resumed production on a reformer unit that had been shut for repairs since a fire in late April, according to a company statement. The plant’s throughput for the second quarter is projected to reach 60,000 barrels a day.

A shut hydrocracker at Valero’s Port Arthur, Texas, refinery is expected to restart within the next week after undergoing 30 days of maintenance that began May 9. Work included catalyst changeouts on the 45,000-barrel-a-day unit, according to Bill Day, a company spokesman based in San Antonio, who said maintenance continues today.

The return of such units may boost Gulf Coast utilization rates and add to already seasonally high inventories of gasoline in the region, known as PADD 3.

Stockpiles of motor fuel soared to 77 million barrels in the week ended May 31, the highest level for this time of year in data going back to 1990, according to U.S. Energy Information Administration data. Gulf refiners processed 8.28 million barrels a day of crude and other feedstock, or about 91 percent of refinery capacity.

The 3-2-1 crack spread on the Gulf, a rough measure of refining margins based on West Texas Intermediate in Cushing, Oklahoma, fell 59 cents to $20.97 a barrel. The same spread for Light Louisiana Sweet oil dropped $1.19 to $11.37 a barrel.

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