Two Valero Energy Corp. refineries and one Chevron Corp. plant are also shut. Along with Marathon’s Galveston Bay, they represent about 1.2 million barrels a day of Gulf Coast refining capacity. Conventional spot gasoline in Houston jumped as much as 1.38 cents to a 1.5 cent premium to futures in New York on Monday, its strongest showing since Dec. 7.
Valero’s 225,000 barrel-a-day plant in Texas City had begun restarting some production units as of Saturday after the Friday power loss, but could also take some days to restore full operations. Big production units like crude processors, cokers and fluid catalytic crackers can take time to restart after abrupt shutdowns leave liquid trapped in cooling pipes. Valero hasn’t responded to a request for comment.
Meanwhile, Valero’s 263,800 barrel-a-day Houston refinery shut unexpectedly Monday amid heavy flaring. Chevron’s Pasadena refinery on the Houston Ship Channel is trying to restart operations after the boilers went down.
Refinery utilization on the Gulf Coast, the largest concentration of U.S. refining might, was only 86% as of the week ended Jan. 28. This reflects the heavy maintenance season in progress as plants perform work that was pushed back in 2020 and 2021 to conserve cash during the height of the pandemic.
Energy Aspects has already forecast that planned maintenance alone will take out more than 1.4 million barrels a day of U.S. crude capacity January through April. That’s about 200,000 barrels a day more than during the same period in 2015-2019 that got taken offline for work.
The market for their products is robust if refiners can keep increasing run rates. The four-week average for products supplied in the U.S. jumped 2.1% to 21.6 million barrels a day in the week ended Jan. 28, the highest since Aug. 2019.
Gulf Coast gasoline supplies have fallen for two consecutive weeks. Distillate inventories in the region fell 4.8% to the lowest since Dec. 24. On the East Coast, distillate stocks have dropped eight straight weeks to the lowest since April 2020.
The 3-2-1 crack spread, which measures the profit for refining crude oil into products like gasoline and diesel, jumped above $24 a barrel for the first time since August in early Monday trading. Expectations are for that spread to widen further as the summer driving season approaches.
Refining margins (in $/bbl):
- Maya U.S. Gulf coking at $16.23 (Feb. 3)
- LLS U.S. Gulf cracking at $13.24 (Feb. 3)
- WCS U.S. Midcontinent coking at $38.03 (Feb. 3)
- East Coast Forcados cracking at $8.93 (Feb. 3)
- U.S. West Coast WCS crude oil 3-2-1 crack spread at $39.11
- Nymex 3-2-1 front-month crack spread at $22.50 (Feb. 4)
- For more crack spreads, see CRCKs