San Francisco-LA CARBOB spread narrows
OREANDA-NEWS. September 26, 2016. Los Angeles-area refining troubles narrowed a northern California gasoline premium this week from a seven-month high.
The spread between San Francisco and Los Angeles CARBOB grew to 24.5?/USG a week ago, on 16 September, as the state's most liquid gasoline market had healthy inventories and San Francisco experienced supply concerns. San Francisco CARBOB prices rose in the first half of September amid tightness at Chevron's 250,000 b/d refinery in Richmond, California, and Tesoro's 168,000 b/d Golden Eagle refinery in Martinez.
But that prompt market spread narrowed by 13.5?/USG this week, to 11?/USG, as supply concerns pressured Los Angeles gasoline prices and San Francisco's prices stayed flat.
On 19 September PBF Energy reported a mechanical issues and a power outage at its 155,000 b/d refinery in Torrance, California. Heavy flaring continued for three days as it recovered from the outages.
Fresh problems at northern California refineries could widen the spread again. Officials shut tanker unloading at Phillips 66's 120,000 Rodeo plant in its San Francisco complex on 22 September as crews investigated the cause of an oil sheen near the plant. Market participants have mostly shrugged off the news, but anticipated that it could dampen run rates and bolster prices in the region if the problem were to persist for several days. This could return the spread to levels seen last week, particularly as it happens concurrently with supply concerns easing in Los Angeles. PBF Energy said Thursday it was supplying customers as restarts operations.
Supply conditions have also shifted north of California. Portland, Oregon, suboctane gasoline closed at parity on Thursday to Los Angeles CARBOB after commanding a 25?/USG premium over Los Angeles last week. Portland was handicapped by supply tightness amid refiner hiccups in the region this month, as well as San Francisco bay market tightness, which is a natural supply source for Portland. But as supply concerns have also eased in the Pacific Northwest, that spread has similarly narrowed.