26 January 2011 23:24 [Source: ICIS news]
HOUSTON (ICIS)--Strong distillate margins have prompted Valero to continue running refineries at maximum distillate output, despite the traditional reduction typically seen as winter winds down, an executive for the US-based refiner said on Wednesday.
Strong margins for gasoline, and particularly distillate, played a major role in Valero’s robust performance in the fourth quarter, said Mike Ciskowski, Valero executive vice president and chief financial officer.
He made his comments during a fourth-quarter conference call.
While the gasoline crack gained significantly from 2009, distillate refining margins have remained higher by $8-$10/bbl than the gasoline crack. The question for refiners is - as summer approaches - if they should cut back on distillate production, as is typical for the season.
Valero has been running a 30% distillate yield at its refineries, which is near the top of the possible range for production. And executives said that they do not plan to change that output moving into the summer.
“The US had an uptick the last couple weeks of December in demand for gasoline, but in and of itself, the year was very comparable to ,” a company executive said. “Distillate production is much better, and there’s a lot of demand around the world.”
In the first quarter of 2011, Valero pointed out that there would be a few catalytic crackers shut for turnarounds, which is the gasoline-producing unit at refineries. But most of these are scheduled to be back on line by April, causing little interruption to summer gasoline supplies.
In the Gulf coast, ultra-low sulphur diesel refining margins against West Texas Intermediate (WTI) more than doubled from $6.33/bbl in the fourth quarter of 2009 to $13.22/bbl in the fourth quarter of 2010. US Gulf gasoline margins jumped nearly 50% from $3.90/bbl in 2009 to $5.76/bbl in 2010.
Distillate refined products include heating oil, jet fuel and diesel.
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