Western Refining sees west coast products recovery

OREANDA-NEWS. August 03, 2016.  A temporary products supply glut on the US west coast should clear over the next thirty days, Western Refining chief executive Jeff Stevens said today.

California gasoline prices fell unusually low in July, becoming the cheapest outright prices among major US markets during the month for the first time since 2011. Los Angeles Carbob settled at \\$1.1736/USG yesterday, down by 45pc from the same day last year and at a 14.63?/USG premium to US Gulf coast waterborne prices, based on Argus assessments.

Uncertainty over whether PBF Energy could successfully take control of operations at the 155,000 b/d refinery in Torrance, California, at the beginning of July attracted too many gasoline cargoes, Stevens said.

"Our belief is that we'll see a clean up on the west coast over the next 30 days, similar to what we saw in February," Stevens said. "I think the fundamentals that we've talked about — demand in the southwest, demand in California — still look very strong."

Western, which supplies fuel to the Arizona market from its 125,000 b/d refinery in El Paso, Texas, said regional same-store sales volumes in the second quarter were up 7pc compared to the same quarter last year. That strength had continued through July and into August, he said.

The stronger southwestern fuels market and lingering access to cheaper crudes helped lift the US independent refiner during the quarter. Western's pipeline connections to Bakken production in the midcontinent and Delaware basin production in west Texas and New Mexico maintained fading geographic advantages its refineries hold for crude supplies.

Bakken production had fallen, but its availability to Western's 92,000 b/d refinery in St Paul Park, Minnesota, had improved as demand to rail the midcontinent crude had fallen. Low global crude prices have erased Bakken's competitiveness by rail to refineries with access to waterborne light, sweet competitors.

Improved pipeline access for west Texas crudes had narrowed the refiner's advantage on light, sweet Delaware basin production. But Western still had an edge on transportation costs for the crude through its own gathering and pipeline systems, Stevens said.

Western reported a \\$65.4mn profit for the second quarter, down from \\$133.9mn in the same quarter last year.

2519640