Gulf Coast cash gasoline down on expected refinery unit restart

Gulf Coast cash gasoline down, production up

Gulf Coast cash gasoline

Gulf Coast cash gasoline differentials fell on Tuesday as the expected restart of a fluid catalytic cracking unit at Motiva’s Port Arthur refinery (shown) overrode concerns about an unplanned outage at Exxon’s Baytown refinery. NPR.org photo.

By Kristen Hays

HOUSTON, May 3 (Reuters) – Gulf Coast cash gasoline differentials fell on Tuesday as the well-supplied market anticipated this week’s restart of a gasoline-making unit at the nation’s largest refinery, traders said.

The expected restart of a fluid catalytic cracking unit at Motiva Enterprises’ 603,000-barrel-per-day refinery in Port Arthur, Texas, overrode concern about the unplanned outage late on Monday of a crude distillation unit at Exxon Mobil Corp’s 560,500-bpd plant in Baytown, Texas, the nation’s second-largest.

A2 CBOB gasoline differentials slipped a penny per gallon to a 17.75-cent discount to June RBOB futures, while conventional M2 gasoline fell half a cent per gallon to a 14.75-cent discount, traders said.

Traders and brokers noted that aside from planned or unplanned work, refiners are making fuels despite a sharp drop in margins from a year ago, when crude prices were higher.

“Narrower profits means you need more volume to make up for the weaker margins,” one broker said.

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For example, Western Refining Inc on Tuesday reported a 90 percent decline in its quarterly profit because of low margins and glutted U.S. fuel stocks. Other refiners face similar fallout from running plants hard in late 2015 and early 2016, when gasoline margins were better.

“We started the year with higher-than-usual winter-grade inventories, leading to the volatility in the gas crack,” Western Refining Chief Executive Jeff Stevens told analysts on Tuesday.

Those margins have improved as refiners expect strong demand during the summer driving season amid low gas prices, Stevens said.

Gulf Coast gasoline stocks were 83.2 million barrels in the week ended April 22, more than 96 percent of the 26-year high of 86.3 million barrels reached in January. The U.S. Energy Information Administration will disclose last week’s levels on Wednesday. (Reporting by Kristen Hays; Editing by Paul Simao)

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