USWC Weekly: Spot Prices Drop, ULSD Sees Steepest Fall


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- U.S. West Coast fuel spot markets edge lower this week, 
led by a sharp decline in San Francisco ultra-low sulfur diesel (ULSD) spot 
prices as improving supply conditions and the absence of major refinery 
disruptions eased the concerns that had fueled springtime rallies across the 
region.

   The biggest move of the week came in the San Francisco ULSD market, where 
spot prices averaged $3.6542 gallon during the week, down 43.52cts or 10.64% 
from the previous week's $4.0895 gallon average. Despite the decline, prices 
remained above the $2.4587 gallon recorded during the same period of the 
previous year. The drop erased much of the risk premium that had accumulated 
during refinery outages and maintenance events earlier this year.

   Los Angeles jet fuel also weakened, with spot prices averaging $3.4782 
gallon during the week, down 27.52cts or 7.33% from the previous week's $3.7535 
gallon average. Prices remained above the $2.0787 gallon recorded during the 
previous year.

   Meanwhile, Los Angeles CARBOB regular averaged $3.3461 gallon during the 
week, down 12.89cts or 3.71% from the prior week's average of $3.4750 gallon 
while remaining above the $2.2529 gallon reported during the previous year.

   The softer tone across West Coast markets coincided with improving inventory 
data. According to the Energy Information Administration, PADD 5 gasoline 
stocks rose by 200,000 bbl to 27.3 million bbl during the week ended June 5, 
snapping a four-week decline. Distillate inventories increased by 200,000 bbl 
to 10.2 million bbl, while jet fuel stocks climbed by 200,000 bbl to 11 million 
bbl.

   Unlike earlier this spring, when refinery outages and flaring activity drove 
sharp gains in diesel and jet fuel premiums, this week was relatively quiet on 
the operational front. On Thursday (6/9), Chevron reported flaring activity at 
it's 245,000 bpd Richmond, California, refinery. The company plans to conduct 
maintenance on the refinery's petroleum fluidized catalytic cracker to install 
a wet gas scrubber. 

   With no major refinery disruptions or unplanned outages reported, traders 
appeared more focused on improving inventory levels and easing prompt supply 
concerns. 




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