The lowest-sulfur US Gulf Coast VGO, still losing support with a key Houston-area refinery FCC down, fell below $50/b Monday despite stronger refined products cracks and market talk of a drawdown in supply.
VGO at maximum 0.5% sulfur (low-sulfur VGO) fell $1.52/b to a two-week low at $48.54/b and went below $50/b for the first time since April 18. It has been above $50/b seven of the last 10 days after not reaching that threshold at all previously in 2016.
The differential for low-sulfur VGO fell 35 cents to $7.35/b on offer pressure.
"Buyers are scarce. The market seems to be falling further," a US feedstocks trader said.
Market dynamics should suggest support for VGO but it is not there, he said.
"Traders have sold most of their in-tank inventories," the trader said. "They are looking to reload at considerably lower levels now."
The Gulf Coast gasoline crack against region-dominant Louisiana Light Sweet crude could be a source of surer footing, market sources said. The value of 87-unleaded over LSS rose 80 cents to $16.41/b Monday and topped $16/b for the first time since March 24. The ULSD crack rose 43 cents to $9.99/b.
VGO began to fall late last week on news that the FCC at the 340,000 b/d, Shell-operated refinery at Deer Park, Texas, would be unavailable into late spring.
