USWC Fuel Oil Prices Rise on Refinery Closures in May


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- U.S. West Coast fuel oil prices remained high through 
May, reflecting major refinery closures and planned turnarounds in April, 
coupled with firm demand ahead of the summer driving and travel season.
The steepest increases were seen in the Los Angeles market following refining 
production shutdowns and planned turnarounds in recent months. Los Angeles 
CARBOB regular spot prices traded at an average of $3.90 gallon in May, a 4% 
increase from April and 61% higher versus the same month of the prior year.

   The strength in U.S. West Coast gasoline prices was driven by limited 
inventories reported by the Energy Information Administration for three 
consecutive weeks in May. Gasoline stocks declined by 1 million bbl to 26.9 
million bbl during the week ended May 22, after falling the prior week. 
Year-over-year, gasoline stocks were 300,000 bbl lower than the same week last 
year.  the EIA said.

   On distillates, San Francisco ultra-low sulfur diesel (ULSD) reported the 
highest increase of the month after reaching a 61.25cts premium to NYMEX ULSD 
futures on May 20 before falling to a 40cts premium on May 27 as the market 
rolled into the July contract and buying interest softened.

   Meanwhile, jet fuel spot average prices in Los Angeles climbed to $4.15 
gallon in May of this year, doubling the price recorded in the same month of 
2025.

   The loss of refining capacity across California pushed higher spot prices in 
the U.S. West Coast. Valero ceased refining operations at its 145,000 bpd 
Benicia refinery in April 2026, while Phillips 66 had already shut its 139,000 
bpd Los Angeles refinery by the end of 2025. Together, the closures removed 
roughly 284,000 bpd of refining capacity from California's fuel system, 
reducing regional supply flexibility for the summer.

   The refinery closures coincided with seasonal demand growth as California 
and the broader West Coast prepared for the summer driving season and increased 
air travel demand. Traders said concerns over maintaining adequate gasoline, 
diesel and jet fuel supplies through the summer months continued to support 
prompt basis values despite periodic inventory builds and increased imports.

   Looking ahead, the West Coast is expected to continue facing higher prices 
amid supply constraints, the transition to more expensive summer-grade 
gasoline, and expectations of strong buying interest ahead of the summer 
driving season."

    




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