Houston — Reforming margins in the US Gulf Coast are at the lowest in over a year amid a saturated gasoline market as stay-at-home orders crush demand.
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The spread between USGC pipeline unleaded 87 gasoline and heavy naphtha has registered at 7 cents/gal over the past four trading days, its lowest level in over a year. The spread was last lower on February 25, 2019, at 6 cents/gal. The spread between finished gasoline and heavy naphtha has averaged 16.4 cents/gal over the past 10 days, 52% lower than the previous 10-day average of 34.3 cents/gal.
Sources said this has prompted regional refiners to cut reformer runs, cutting demand for naphtha.
"Refiners cut runs of reformers, not buying N+A naphtha," a regional market source said.
Naphtha is a feedstock for the reformer unit which produces reformate, an octane-boosting gasoline blendstock. Demand for blendstocks was heard to be bleak due to the lack of incentive to blend or produce gasoline.
Market participants said refiners that have reduced reformer rates include Phillips 66 and ExxonMobil.
"Many of our refineries are running at reduced rates," Phillips 66 spokesman Dennis Nuss said. "We are not providing specifics on units or locations."
ExxonMobil spokesman Jeremy Eikenberry refused comment on specific unit operations, and said operations were ongoing at the Baytown and Beaumont refineries.
"While we do not comment on specific unit production rates, we continue to meet contractual commitments," he said.
No heavy naphtha trades or bids were heard Wednesday.
S&P Global Platts assessed heavy naphtha barges in the USGC at barge gasoline minus 9 cents/gal, for a flat price of 40.29 cents/gal Wednesday.
Data released by the US Energy Information Administration Wednesday showed coast-to-coast gasoline demand down 859,000 b/d for the week ended March 20 to 8.8 million b/d.
At least 13 states are under mandatory stay-at-home orders and more than half of the country is under some level of lockdown, crushing gasoline demand.