West Coast Fuel Prices Set to Rise as Benicia Goes Offline


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- Valero's scheduled end-April closure of its Benicia, 
California refinery will further tighten a West Coast processing system already 
short on fuel production and potentially add to surging prices of jet fuel and 
other products.

   The Benicia refinery, which used to process roughly 145,000 bpd of crude, 
has been taken offline through a phased approach that began earlier this year. 
According to the company, the process started with the idling of processing 
units in February while inventories were worked down ahead of the full shutdown.

   Valero said the idling of the Benicia facility stemmed from essential state 
inspections that began in February. It said gasoline output had continued to 
reduce inventory levels until all units were shuttered.

   The timing of the shutdown is proving critical for fuel markets.

   The West Coast refining system is already operating with reduced capacity 
following the closure of the 147,000-bpd Phillips 66 Los Angeles refinery 
earlier this year, leaving fewer facilities available to balance supply. As 
capacity has declined, prices have become increasingly sensitive to supply 
risks -- a dynamic that has been most visible in the jet fuel market.
Los Angeles jet fuel prompt basis was jumped to a 95cts premium above May NYMEX 
ULSD futures, after reaching a historic $1.10 gallon premium earlier in April.

   Traders have consistently pointed to shrinking refining capacity and limited 
replacement supply as primary drivers behind the volatility that took West 
Coast jet values to triple-digit territory for the first time.

   With the idling at Benicia, the regional supply cushion will narrow further 
and reinforcing a structural shift in the West Coast fuel market. This 
landscape is defined by tighter supply balances and a heavier reliance on 
imports, raising the risk of sharp price swings for gasoline and jet fuel.

    

    

    




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