By Shariq Khan
(Reuters) – U.S. oil refining margins hit their highest level in three months on Tuesday and are expected to rise, analysts said, as unscheduled refining shutdowns strain already tight fuel supplies.
The outages have boosted gasoline prices in Texas and Oklahoma this year ahead of what is expected to be a heavier-than-usual turnaround season for refineries. The rise in prices and margins is unusual for this time of year, when travel is down.
The crack spread, a key indicator of refiners’ profits that measures the difference between crude oil prices and the selling prices of finished products, hit $42.41 on Tuesday, the highest since October. January’s five-year average is $15.56, according to an analysis of data from Refinitiv Eikon.
Average gasoline prices in Texas hit about $3.07 a gallon on Tuesday, up nearly 44 cents from a month ago, according to auto group AAA. Motorists in Oklahoma also pay about 45 cents more, at $3.13 a gallon, according to AAA data.
A diesel production unit at the PBF Energy refinery in Chalmette, Louisiana, was shut down following a fire on Saturday. He could be out for at least a month. Exxon Mobil said Monday it will perform scheduled maintenance on several units at its petrochemical complex in Baytown, Texas.
The current refinery maintenance season could be much longer than usual, with many U.S. Gulf Coast refineries still operating below capacity after winter storm Elliott destroyed some 1.5 million barrels a year. refining capacity day in December. A Suncor refinery in Commerce City, Colorado, has remained offline since the storm.
Many overhauls have also been delayed by the pandemic, and refiners are now planning twice as many overhauls this spring as usual, putting increased pressure on fuel supply.
Fuel inventories are low compared to historic levels, “so there’s little room for error,” said Rob Thummel, portfolio manager at Tortoise. Gasoline inventories in the United States are about 10% below normal and diesel stocks about 20% below normal.
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An upcoming ban on Russian fuel shipments carried by sea will lead to renewed calls for U.S. refined products, said Ole Hansen, head of commodities strategy at Saxo Bank.
“Europe’s diesel supply from the United States and the emerging refining hub in the Middle East could make up for some of the missing barrels from Russia, but a shortfall looks likely,” Hansen said.
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(Reporting by Shariq Khan; Editing by Stephen Coates)
. margins refining oil at United States reach their high level for month so plant stops increase