February 10, 2012 / 8:54 PM / 8 years ago

US Cash Products-Chicago gasoline eases sharp plunge

* Waning interest in winter-grade sends Chicago gasoline down

* Chicago ULSD partly recoups decline

* Gulf gasoline slides despite refinery unit upset

HOUSTON, Feb 10 (Reuters) - Chicago cash gasoline differentials plunged sharply on Friday on waning interest in winter-grade fuels, but partially rebounded by day’s end, traders said.

Early on Friday cycle 2 87-octaine conventional unleaded gasoline differentials fell 16 cents per gallon to 45.00 cents under the March RBOB futures contract on the New York Mercantile Exchange.

A Midwest trader attributed much of the slide to “a little dumping of winter grade” when supply remains strong.

By afternoon pre-weekend buying interest “came back a touch,” another Midwest trader said, boosting differentials to about 36 cents under, down about 7 cents per gallon from Thursday’s levels.

Winter-grade gasoline has a higher Reid vapor pressure (RVP) than spring and summer grades. The RVP is a measure of properties that help control emissions and engine function.

The lower the RVP in cold weather, the easier it is for engines to start and run. Lower RVP grades are used in warmer months.

Current Chicago cycles are still focused on winter-grade gasoline, which is pushing values down, traders said. They expect values to rebound when the cycles switch to lower RVP grades.

“This is just a real rough patch of the year for Chicago gas,” the second trader said.

Group Three gasoline was much more sedate, climbing half a cent per gallon to 14 cents under after ConocoPhillips reported a process upset late Thursday at its joint-venture 146,000 barrel-per-day (bpd) refinery in Borger, Texas.

Chicago ultra-low sulfur diesel differentials climbed a half a cent per gallon on Friday to 23.50 cents under the March NYMEX heating oil screen, partly erasing Thursday’s 2-cent decline. Group Three ULSD differentials slipped 0.75 cent per gallon to 8.25/7.75 cents under, traders said.

On the Gulf Coast, conventional M4 gasoline differentials slid half a cent per gallon to 3 cents under March NYMEX RBOB futures as Valero Energy Corp said there was no material impact to output after a sulfur recovery unit tripped offline Thursday at its 287,000-bpd refinery in Port Arthur, Texas.

Gulf Coast jet fuel differentials gained 1.25 cents per gallon to a bid-offer spread of a penny under March NYMEX heating oil futures to even to the board as traders focused on a new five-day lifting cycle. Gulf ULSD differentials were pegged at 3.75/3.25 cents under, up half a cent per gallon.

In the New York Harbor, cash distillate markets were a mixed bag as transportation fuels differentials showed modest gains while heating fuels differentials fell slightly.

Prompt jet fuel was pegged at either side of 4 cents per gallon over March NYMEX heating oil, up 0.50 cent.

The market appeared to have reached bottom on Thursday, after sliding by more than 8 cents from its highs in late January, as renewed buying interest was seen in the market, traders said.

Prompt low-sulfur diesel also gained half a cent per gallon, talking at 0.75/1.25 cent over.

Meanwhile, prompt heating oil slipped about a half cent per gallon, talking at either side of flat to the screen.

Harbor gasoline markets were steady on Friday, traders said.

For more refinery news, please go to

U.S. GULF COAST <0#P-USG>

Cycle 10 conventional M4 gasoline was seen done at 2.75, 3.25 and 3.00 cents under March RBOB futures, down half a cent.

Scheduling Cycle 61 was seen done at 3.75, 3.50, 3.45 and 3.25 cents under the March heating oil screen, up half a cent.

Newly prompt Cycle 10 54-grade jet fuel was pegged at 1.00 cent under to even to the board, up 1.25 cents.

Heating oil for Cycle 10 was flat at 5.75/5.25 cents under.

NEW YORK HARBOR <0#P-NYH>

Prompt heating oil was pegged at either side of flat to the screen, down a half cent, while any-February barrels were talked at flat to 0.50 cent over, down a quarter cent.

Prompt and any-February low-sulfur diesel were called 0.75/1.25 cents over, up a half cent.

Prompt ULSD was pegged at 1.25/1.75 cents over, unchanged, while any-February barrels were talked at 1.50/2.00 cents over.

Prompt and any-February jet fuel were called 3.75/4.25 cents over, up half cent. February kerosene was talked at either side of 14 cents over.

Prompt F5 RBOB was called 1.50/1.00 cents under, unchanged, while any-February barrels were talked at 1.75/1.25 cents under.

Ratable February F5 RBOB was pegged at either side of 1.25 cents under.

Prompt M4 conventional gasoline was talked at either side of 2 cents over, unchanged, while any-February barrels were pegged at 1.50/2.00 cents over.

MIDWEST <0#P-G3> <0#P-MC>

Chicago cycle 2 gasoline was seen done early at 45 cents under March RBOB futures, down 16 cents, but later rebounded to end the day at 36 cents under, down 7 cents.

Chicago ULSD gained a penny to 23.50 cents under the March heating oil screen.

Group Three gasoline climbed half a cent to 14 cents under, while Group Three ULSD slid 0.75 cent to 8 cents under.

Reporting by Kristen Hays in Houston and Jeffrey Kerr in New York; Editing by Lisa Shumaker

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