US Gulf Coast feedstocks rode a lift from higher gasoline cracks against Louisiana Light Sweet crude, which offset bearish refinery news to rise slightly at the lowest sulfur levels Tuesday, market sources said.
The crack for 87-unleaded gasoline against region-dominant Louisiana Light Sweet crude rose $1.46/b to a near-three-week high at $13.35/b.
Gasoline found support in the fluid catalytic cracker shutdown at the Shell-Pemex joint venture refinery at Deer Park, Texas.
The VGO-consuming FCC going offline was viewed at first as bearish for feedstocks, but the rise in gasoline leveled the scales. A Shell spokesman did not return a message about how long the 67,400 b/d FCC would be offline.
VGO at maximum 0.5% sulfur ("low-sulfur VGO") rose 5 cents to cash July WTI plus $7.60/b.
"Deer Park would be long VGO with the FCC going down," a US feedstocks source said. "They're usually short. The damage can be assessed later. We may not see the impact for four or five days."
PBF Energy, which saw an FCC go online recently at its refinery east of New Orleans, and Texas and Louisiana refinery operator Marathon, were spotted in the market Tuesday as buyers. Valero, Chevron and ExxonMobil also were spotted on the VGO bid this week, market sources said.
A second US feedstocks source said interest was developing in VGO cargoes from Europe arriving in Gulf Coast ports in early July.
Also Tuesday, BP was heard to be seeing transit for 50 mt of VGO aboard the Voidomatis from the refinery at Come-By-Chance, Newfoundland, to either New York Harbor or the Gulf Coast. The ship would be expected to leave Newfoundland before July 1 with a cargo that would add length to the Houston trade if it makes it that far.
The second US feedstocks source said demand for another feedstock, straight run fuel oil, has picked up in recent days with Vitol in the market as a buyer. Chevron also was heard to have bid interest in straight run product, market sources said.
Straight run fuel oil dropped despite the bid interest. LSSR fuel oil at maximum 0.3% sulfur dropped 20 cents to cash July WTI plus $4.85/b on market indications of a deeper discount to VGO.
