Refinery margin tracker: USWC refinery run cuts pay off as Saudi crude arrivals ramp up

Weak refining margins resulting from poor demand has US West Coast refiners further paring back runs, with Marathon temporarily idling its 161,500 b/d Martinez, California, refinery as stay-at-home orders remain in place to prevent the spread of coronavirus, an analysis from S&P Global Platts showed Monday.

The run cuts are paying off, with better margins for all USWC refiners, and will also allow Marathon to reap the benefit of its closure of Martinez with better economics for its 363,000 b/d Los Angeles, California, facility.
The USWC coking margin for Arab Light averaged $4.84/b in the week that ended Friday, compared with $2.90/b a week earlier, according to S&P Global Platts Analytics margin data, as diesel cracks outshone those of gasoline, which only increased marginally week on week.

USWC CARBOB gasoline cracks for regional benchmark Alaska North Slope averaged minus $5.48/b in the week that ended Friday, compared with a minus $12.98/b crack the week before, Platts data show.

USWC CARB diesel cracks for Arab Light and Alaska North Slope averaged $12.51/b and $13.05/b in the same time period, respectively.

California, the most populous of all the US states, was the first to issue a stay-at-home order, which went into effect March 19. Neighboring states Oregon and Washington issued stay-at-home orders on March 23.

According to California’s Energy Watch, the state’s refiners cut crude runs by 6.1% in the week that ended April 10, reducing CARBOB gasoline production by 6.1% and raising CARB diesel output by 1.5%.

CHEVRON UPS APRIL USWC SAUDI CRUDE DELIVERIES
US customs data showed imports of Saudi crude by USWC refiners rose sharply during the first half of April to 3.7 million barrels, as ships fixed in early March arrived following the Saudi vow to increase crude sales by 300,000 b/d to 12.3 million b/d in April and before it increased the selling price in May.

Saudi Aramco’s official selling price for US customers buying Arab Light in April held a $3.75/b discount to ASCI, compared with a 75 cent/b discount in May.

Lower prices spurred a flurry of Saudi imports, particularly on the US West Coast, compared with levels seen earlier in the year.

Total USWC January imports of Saudi crude averaged just under 5.29 million barrels or about 170,500 b/d, according to Energy Information Administration data.

During the first half of April, Chevron imported 3.38 million barrels of Arab Light into California, or about 225,000 b/d. Over half of that — 138,000 b/d — went to its 269,000 b/d El Segundo plant with the remainder going to its 245,271 b/d Richmond refinery.

Marathon also received a 347,000 barrel cargo of Arab Extra Light on April 9 at its Los Angeles facility, according to US Customs data. The official selling price for Arab Extra Light in April was a $2.10/b discount, compared with a 40 cent/b premium in May.
Source: Platts