U.S. Natural Gas To Mexico Skyrockets Making Some In Mexico Nervous About Dependence

Drug tunnels are not the only passageways beneath the U.S.-Mexico border that transport valuable cargo. Pipelines cross the boundary too, carrying natural gas south.

This trade is up 300 percent since 2010, and now it set to double again by 2019. It’s the largest natural gas export capacity expansion in U.S. history, said Victoria Zaretskaya of the U.S. Energy Information Administration.

 

“You saw just a bonanza of infrastructure,” said Jeremy Martin, vice president for energy and sustainability at the Institute of the Americas, a think tank at the University of California San Diego. “The natural gas imports into Mexico have doubled every year for the previous three years. Projections continue to be blown away.”

17 gas pipelines enter Mexico from the U.S. Four more are in development.

The natural gas has allowed Mexico to shift its source of electricity and factory fuel. Electric power and industry converted from burning diesel fuel and other oil products to natural gas. Now Mexico imports 60 percent of its natural gas from the United States, according to Zumma, an energy consulting firm in Mexico City.

That dependence is causing for concern in Mexico, given the disregard for the bilateral relationship evinced by the Trump administration.

“Definitely there is a level of worry,” said Jonathan Pinzón, a partner at Zumma. “In government and industry circles, they are discussing alternatives, whether gas can be brought from other regions. It’s a very important discussion to keep having, now that trade between the two countries is being re-examined.”

The worry about dependence is a real reverse, Martin said. “For years the idea of energy security was, if you were interdependent you were better off.”

But the concern in Mexico is also tempered by the knowledge that protectionist measures would hurt powerful American energy firms. Without Mexico, the gas might have no customer. That could cause gas prices to fall further. They have been low for several years.

“It would cause a lot of problems in the producing regions, like Texas. In that sense I think it would be political suicide for the current administration to put any restriction on that gas moving to Mexico,” Pinzón said.

The amount of gas is not trifling. It makes up five percent of U.S. production, Martin said.

Experts are in agreement that Mexico is likely to retaliate against trade actions it sees as unfavorable.

Sempra Energy, the San Diego-based Fortune 500 natural gas and electricity holding company whose subsidiaries serve most of Southern California, has significant business across the border.

The company declined an interview. Its subsidiary IEnova has invested $7 billion in energy infrastructure in Mexico over the last two decades. When current projects are complete, it will have more than 1,800 miles of natural gas pipeline in the country, spokeswoman Paty Mitchell wrote in email.

Mexico’s conversion

The pipeline rush south resulted from two developments. Around the year 2000, Mexico began a concerted conversion from diesel fuel to cleaner burning and more efficient natural gas.

Six years later, fracking and horizontal drilling produced so much natural gas that low prices became a problem. Mexico’s own natural gas production was falling. The country found its northern neighbor eager to sell. The gas was a bargain and for U.S. producers it helped support the price.

Most of the existing and planned pipelines run through Texas. Gas from the Eagle Ford Shale and Permian Basin courses through them, though gas could enter the pipeline system from other fields.

There are crossings in California: Sempra has one near Otay Mesa and another near Mexicali. TransCanada has a pipeline crossing near Ogilby.

For full read : http://www.kpbs.org/news/2017/mar/27/us-natural-gas-mexico-skyrockets-making-some-mexic/

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Exclusive: Saudi exports to U.S. to fall by 300,000 barrels per day in March – official

Saudi Arabia’s crude exports to the United States in March will fall by around 300,000 barrels per day from February, in line with OPEC’s agreement to reduce supply, a Saudi energy ministry official said on Thursday.

The United States imported about 1.3 million bpd from OPEC’s top exporter in February, according to U.S. Energy Information Administration data.

“Exports may fluctuate week on week, but on average in March exports will be down,” the official said, responding to a Reuters request to comment on the EIA data. Saudi exports are then expected to remain around March’s level for the next few months, the official said.

The official noted that export data showed higher Saudi oil exports in January and February, but these shipments were the result of cargo loaded in November and December.

Saudi Arabia has made the largest cut in production after the agreement reached last year by both the Organization of the Petroleum Exporting Countries and non-OPEC producers to reduce output by 1.8 million bpd.

Oil prices have been in a downtrend for two weeks on concerns that OPEC cuts so far have not dented record U.S. crude inventories. U.S. crude has declined nearly 10 percent since March 7 as speculators reduced big bets that oil would keep rising. It settled on $47.70 on Thursday.

Crude stocks in the United States, the world’s largest oil consumer, were a record 533 million barrels last week, the EIA said. In the week ended March 17, U.S. imports from Saudi Arabia unexpectedly rose by more than 200,000 bpd to 1.28 million bpd, after a sharp decline the prior week.

The official said lower Saudi exports to the U.S. is likely to affect stockpiling in the U.S.

“This is mainly because there is a refinery maintenance in the U.S. The cuts in exports will help the crude stockpiling in the U.S. to go down,” the official said.

Gasoline stocks are falling, but remain seasonally high.

The official also said he believed other Gulf oil exporters will follow suit and their crude exports will be lower in March and will continue to decline. Imports from Iraq and Kuwait dropped sharply for the week to March 10 but then rebounded in the most recent week of data.

For full read : http://www.reuters.com/article/us-opec-saudi-usa-idUSKBN16U2OY

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This Texas oilfield is messing with OPEC

Texas is once again making life difficult for OPEC.
The Permian Basin of Texas and New Mexico has emerged as the new poster boy of the U.S. shale oil revolution. Land prices in the Permian have skyrocketed, drilling activity has tripled since last year and production there is poised to soar despite cheap oil prices.
Some are even predicting this hotbed of shale activity could eventually surpass the colossal Ghawar field in Saudi Arabia as the world’s biggest oilfield.

The Permian’s rise on the global stage couldn’t come at a worse time for OPEC, which just last November cobbled together a delicate deal to deal with the oil glut by cutting production.
The latest resurgence of U.S. shale oil output from the basin has caught OPEC off guard. Its strength even prompted U.S. government experts to recently predict that American oil production could soar to a new record by 2018.

“The Permian Basin is definitely the thorn in the side of the OPEC production deal,” said Matt Smith, director of commodity research at ClipperData.
The key is that the unique geology of the Permian allows frackers to hit multiple layers of oil as they drill into the ground. That’s what sets the Permian apart from other major oilfields, making it lucrative to drill there even at today’s sub-$50 prices.

Related: Shale set to lead U.S. to record oil output
The proof is in the skyrocketing cost of land in the Permian Basin, which mostly lies in West Texas but also has a foothold in New Mexico.
Oil explorers have paid as much as $60,000 an acre in the Permian Basin, according to Wood Mackenzie. That’s a stunning 50 times higher than the price four years ago.

Land in the Permian is now fetching 10 times what oil explorers will pay for the Bakken, the North Dakota shale formation that used to be the face of the American shale oil boom.
“While the heyday of the Bakken may well be over, it seems better times are ahead for the Permian. It’s leading to this modern-day land grab, with spiraling prices for land there,” said Smith.

ExxonMobil (XOM) is finally taking notice. After Exxon was late to the shale oil boom, the oil giant spent $5.6 billion earlier this year to purchase coveted land in the Permian. It was Exxon’s largest deal since 2010 and doubled the company’s Permian assets.
“The Permian is the best, by far. It has established itself as the premiere oil basin in the U.S. — and potentially in the world,” said Rob Thummel, a portfolio manager at energy investment firm Tortoise Capital.
U.S. oil producers have added 315 oil rigs since last May. Nearly half of those rigs are located in the Permian Basin alone, which has almost tripled its rig count over the past year, according to Baker Hughes.

For full read : http://money.cnn.com/2017/03/20/investing/permian-basin-oil-texas-shale-opec/

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OPEC leans toward oil cut extension, but non-members need to be in: sources

OPEC oil producers increasingly favor extending beyond June a pact on reducing crude supply to balance the market, sources within the group said, although Russia and other non-members need to remain part of the initiative.

The Organization of the Petroleum Exporting Countries is curbing its output by about 1.2 million barrels per day (bpd) from Jan. 1 for six months, the first reduction in eight years. Russia and other non-OPEC producers agreed to cut half as much.

The deal has lifted oil prices, but inventories in industrial nations are rising and higher returns have encouraged U.S. companies to pump more. A growing number of OPEC officials believe it may take longer than six months to reduce stocks.

“An extension is needed to balance the market,” an OPEC delegate said. “Any extension of the cut agreement should be with non-OPEC.”

OPEC sources told Reuters in February that the group could extend the supply-reduction pact, or even apply deeper cuts from July, if inventories fail to drop to a targeted level.

The group wants stocks in the industrialized world to fall to the average of the past five years. According to the most recent data, for January, inventories of crude and refined products stood 278 million barrels above this level.

Five other OPEC sources said it was increasingly clear that the market needed more than six months to stabilize but added that all producers – in OPEC plus non-members – had to agree.

“The ministers will meet in May to decide, but everyone has to be on board,” an OPEC source from a major producer said.

OPEC next meets to decide output policy on May 25 in Vienna. There will also be a gathering in May of OPEC and non-OPEC producers, OPEC Secretary-General Mohammad Barkindo said last month.

“Hard negotiations are on the way,” another one of the sources said.

Russia, the largest of the 11 outside producers working with OPEC, has not publicly said whether it supports extending the supply cut, but is wary about the revival of U.S. shale output due to higher oil prices.

The revival of shale oil production – whose growth added to the oversupply that battered oil prices in mid-2014 – has restrained the rally this year and may worry OPEC leaders.

OPEC ministers and sources, however, have said they don’t see a large rebound in 2017. One OPEC source said shale production was expected to grow by about 300,000 bpd this year – a level the market could accommodate.

“It’s too early to know whether everyone will agree to this,” a source from a non-OPEC participant in the deal said, referring to prolonging the output curb.

For full read : http://www.reuters.com/article/us-opec-cuts-extension-idUSKBN16R1P4

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East Libyan army takes rivals’ final holdout in southwest Benghazi

Members of East Libyan forces gesture as they sit atop a military vehicle after they captured the final holdout of Islamist-led rivals in the southwest of Benghazi, Libya, March 18, 2017. REUTERS/Stringer

East Libyan forces said they captured the final holdout of Islamist-led rivals in the southwest of Benghazi on Saturday, ending weeks of resistance by fighters camped in a cluster of apartment blocks.

The eastern-based Libyan National Army (LNA) has been waging a campaign in Libya’s second biggest city for nearly three years and still faces pockets of resistance in two northern neighborhoods, despite making big gains since early last year.

Milad al-Zwai, spokesman for the LNA’s special forces, said the siege at the “12 blocks” site ended when rival fighters tried to escape at dawn. He said 23 were killed and six arrested while seven LNA troops were killed and at least six wounded.

LNA spokesman Ahmed al-Mismari said as many as 40 of the LNA’s opponents had been killed. The figures could not be independently verified.

Dozens of family members had also been in the besieged buildings, where according to humanitarian groups they had run out of food and water.

Efforts to evacuate the families had largely failed. Mismari said six families were detained by the LNA and would be investigated. It was not immediately clear how many of the LNA’s opponents or their families had escaped.

The LNA also said it had lost a MiG-21 fighter jet over the Benghazi district of Sabri on Saturday, though the pilot had ejected. It still faces armed opposition in the northern neighborhoods of Sabri and Souq al-Hout.

LNA leader Khalifa Haftar launched his Dignity Operation in Benghazi in May 2014, saying he wanted to rid the city of Islamist militants following a series of bombings and assassinations.

Some of his opponents have openly acknowledged their allegiance to Islamic State or al Qaeda-linked groups but others say they are fighting to prevent a return to authoritarian rule in Libya.

Haftar has rejected a beleaguered U.N.-backed government in Tripoli that was meant to reunite the country after it split between eastern- and western-based governments and military factions in 2014.

On Friday, there were demonstrations against militia rule in central Tripoli after unusually violent clashes this week, and some voiced support for Haftar before the protests were broken up amid gunfire.

Haftar, who many suspect of seeking national rule, addressed the capital’s residents on local TV after the protests saying, “your armed forces will not abandon you, and we will be by your side until Tripoli is returned to the homeland.”

For full read : http://www.reuters.com/article/us-libya-security-idUSKBN16P0LZ

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OPEC Can’t Count on American Drivers to Help Boost Oil Prices

Rising U.S. oil production isn’t the only thing getting in the way of OPEC’s efforts to drain a global glut. American drivers aren’t helping either.

The Organization of Petroleum Exporting Countries is counting on growing demand to bolster the production cuts it’s making in a bid to balance the market. But motorists in the U.S. — the world’s largest consumer of gasoline — are using less, not more. And that’s not likely to change any time soon.

About 40 percent of the crude in America is processed into the motor fuel, government data show. As the price of gasoline has risen more than 30 percent since February 2016, drivers are burning less, swelling supplies to near record highs. Meanwhile, new cars offer consumers an ever-widening variety of more efficient options to cut back on fuel use.

More from Bloomberg.com: Trump’s Second Bid at Travel Ban Knocked Down by Two U.S. Judges

“Don’t expect the U.S. driver to save the market this year — he cares about the price now,” Kevin Book, managing director of the Washington-based research firm ClearView Energy Partners, said in a telephone interview. “There’s now a strong correlation between price and gasoline demand.”

As people trade in old cars, the new vehicles they’re driving are between two and 10 miles per gallon more efficient, Book said. “This is likely to lead to a flattening or even decline of U.S. demand as early as late this year.”

More from Bloomberg.com: Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy

The U.S. fleet of passenger cars and light trucks averaged a record 24.8 miles per gallon during the 2015 model year, an increase of 0.5 mpg from 2014, according to an annual report of automaker efficiency from the Environmental Protection Agency. In November, the agency projected an overall average of 25.6 mpg in 2016.

Trump Factor

One curve ball: required advancements in vehicle fuel efficiency could come to a halt if President Donald Trump strikes a deal with Michigan automakers to bring more factory jobs to the U.S. in exchange for weaker environmental standards. “You need to come back and give us big numbers in terms of jobs,” Trump told the chief executive officers of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV on Wednesday.

More from Bloomberg.com: Trump Plans Historic Cuts Across Government to Fund Defense

While it would take time for a policy change like that to be incorporated into production lines, it could change fuel-use dynamics in the future.

The average price of regular gasoline at the pump nationwide was $2.29 a gallon in February, up 31 percent from a year earlier, AAA data show. In February 2016, the fuel touched $1.696 at a time when the price of crude dropped to $26.05 a barrel in New York, the lowest since 2003.

Swelling Stockpiles

As prices have risen, Americans have cut back on driving, reducing consumption 1.7% so far this year from 2016, according to Energy Information Administration data Wednesday. The fallout: U.S. gasoline inventories rose to a record 259 million barrels in the week ended Feb. 10.

Gasoline and diesel-powered vehicles aren’t the only options for motorists anymore; electric cars are gaining popularity. Manufacturers from Toyota Motor Corp. to General Motors are joining Elon Musk’s Tesla Motors Inc. in developing new models. Volkswagen AG plans to produce 3 million of them a year within the next decade.

“Demand isn’t as inelastic as it used to be,” Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by telephone. “There are substitutes now.”

The outlook isn’t entirely bleak, as some see it. Recent consumption looks soft after two consecutive years of strong demand increases, said Dan McTeague, a Toronto-based senior petroleum analyst at GasBuddy Organization, which tracks retail prices and availability.

“As consumers we are still very important,” Tamar Essner, a New York-based energy analyst at Nasdaq Inc., said by telephone. “About 9 percent of global oil output goes to making gasoline for U.S. drivers.”

For full read : http://finance.yahoo.com/news/opec-cant-count-american-drivers-183104313.html

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Russian oil major says U.S. shale growth imperils OPEC deal

A recovery in U.S. oil output may deter OPEC and non-OPEC producers from extending production cuts beyond June and might lead to a new price war, Russia’s top oil major said on Monday.

U.S. shale oil production had been in retreat as oil prices tumbled from above $100 a barrel in 2014 to below $30 in 2015, making costly fracking processes less profitable.

A deal by the Organization of the Petroleum Exporting Countries with Russia and other producers to rein in output by 1.8 million barrels per day (bpd) for six months from Jan. 1 lifted prices but also encouraged U.S. firms to boost supplies.

“It became evident that U.S. shale oil output has become and will remain a new global oil price regulator for the foreseeable future,” Rosneft said in a written response to Reuters.

“There are significant risks the (OPEC-led) deal won’t be extended partially because of the main participants, but also because of the output dynamics in the United States, which will not want to join any deals in the foreseeable future.”

Russia agreed to join OPEC supply curbs late last year despite initial opposition from Rosneft’s boss Igor Sechin, one of President Vladimir Putin’s closest allies.

“We think that in the long-term global oil demand dynamics and reduced investment during the period of ultra low prices will balance the market, but that the risk of a price war resuming remains,” Rosneft wrote.

Russia has yet to deliver on the pledged cuts, while Saudi Arabia has cut its production far below the levels it had pledged, compensating for waker compliance by other OPEC states.

Rosneft said it came as a surprise to many observers that OPEC’s compliance with cuts was more than 90 percent, and said the success was because the Saudi position on reducing production had “changed a great deal” from the past.

The kingdom, the world’s biggest oil exporter, had long refused to cut output under veteran oil minister Ali al-Naimi. He was replaced last year by Khalid al-Falih.

“It was Saudi Arabia which initiated the pricing war in the first place with the aim of radically increasing its market share by squeezing out producers of ‘costly’ oil,” Rosneft said, in a reference to shale producers.

“This goal became impossible to reach because of the efficiency and viability of the Russian oil industry,” it added.

Naimi had forecast a collapse in output from Russia’s mature fields. Instead, production has risen in the past two years to an all-time high of 11.2 million bpd, partly because a devaluation in the rouble reduced production costs.

Rosneft said the only guaranteed route to balance the market was for all producers to limit supplies, but acknowledged this would not happen because U.S. shale producers would not join any such pact. U.S. law bars them from such action.

Full news read: http://www.reuters.com/article/us-oil-output-russia-idUSKBN16K1MB

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Colombia Rebel Group Wages Oil Pipeline War as Another Disarms

Colombia’s smaller rebel group has unleashed a wave of attacks on the country’s No. 2 oil pipeline, a show of strength amid peace talks that’s creating a headache for companies including Ecopetrol SA and Occidental Petroleum Corp.

There have been 17 attacks this year on the Cano Limon pipeline in eastern Colombia where the National Liberation Army, or ELN by its Spanish initials, is highly active, compared to seven attacks in the first two months of last year, according to state-controlled Ecopetrol. That’s forcing some oil companies to store crude in tanks, rather than transport it to the Caribbean port of Covenas from where it’s shipped to buyers.

Pumping through the pipeline has been halted since Feb. 15, forcing Ecopetrol to declare force majeure on certain exports, according to people familiar with the situation. Drillers may have to halt production at fields in the area if the pipeline isn’t fixed soon as storage space runs out, according to Humberto Alvarez of the USO oil workers union.

ELN rebels initiated peace talks with the Colombian government on Feb. 7, following in the footsteps of the larger Revolutionary Armed Forces of Colombia, or FARC, which finally reached a peace agreement late-2016 after four years of torturous negotiations.

“Peace is very important to the sector,” Ecopetrol Chief Executive Officer Juan Carlos Echeverry said Feb. 24. “We’re asking the ELN to stop bombing the pipelines that transport oil belonging to all Colombians.”

Both Marxist rebel groups were born in the 1960s amid a fierce struggle for land rights in the Andean nation. The United Nations starts its verification of FARC disarmament Wednesday, a process that must finish by May 29 under the terms of the peace deal.

For full news: https://www.bloomberg.com/news/articles/2017-03-01/colombia-rebel-group-wages-oil-pipeline-war-as-another-disarms

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EIA: LNG exports expected to drive growth in U.S. natural gas trade

WASHINGTON, DC — The United States is expected to become a net exporter of natural gas on an average annual basis by 2018, according to the recently released Annual Energy Outlook 2017 (AEO2017) Reference case. The transition to net exporter is driven by declining pipeline imports, growing pipeline exports, and increasing exports of liquefied natural gas (LNG). In most AEO2017 cases, the United States is also projected to become a net exporter of total energy in the 2020s in large part because of increasing natural gas exports.

In 2016, the United States was a net importer of natural gas, with net imports of 0.9 Tcf, or 2.6 Bcfgd. As several LNG export projects currently under construction are completed, LNG exports are expected to make up a growing share of natural gas exports and to surpass pipeline exports of natural gas by 2020.

The Sabine Pass facility in Louisiana became the first operating LNG export facility in the Lower 48 states in 2016. By 2021, four LNG export facilities currently under construction are expected to be completed. Combined, these five plants are expected to have an operational export capacity of 9.2 Bcfgd. After 2021, projected U.S. exports of LNG grow at a more modest rate as U.S. natural gas faces growing competition from other global LNG suppliers.

U.S. exports of natural gas by pipeline to Mexico are also expected to increase. U.S. exports to Mexico have doubled since 2009 and are projected to continue rising through at least 2020 as pipeline projects currently under construction are completed.

U.S. imports of natural gas, most of which come by pipeline from western Canada, are projected to continue declining. In addition to importing less natural gas from Canada, primarily from Alberta, increasing amounts of natural gas from the Marcellus and Utica basins in the Northeast and Midwest regions of the United States are expected to flow to eastern Canadian provinces.

Despite these trends, the United States is expected to remain a net importer of natural gas by pipeline from Canada through 2040 in all but one case in the AEO2017 analysis. In the High Oil and Gas Resource and Technology case, higher natural gas production leads to greater exports of natural gas, and the United States becomes a net exporter of natural gas by pipeline to Canada by 2030.

The growth of natural gas exports, especially from new LNG terminals, sustains continued growth in U.S. natural gas production. In the Reference case, natural gas production is projected to grow through 2020 at about the same rate (3.6% annual average) as it has since 2005, when production of natural gas from shale formations began to grow rapidly. After 2020, natural gas production grows at a lower rate (1.0% annual average) in the Reference case as net export growth moderates, energy efficiencies increase, and natural gas prices slowly rise.

Natural gas production and trade vary with different assumptions for resources and technology, macroeconomic growth, and world oil prices. In the High Oil and Gas Resource and Technology case, larger natural gas resource estimates and improved drilling technology lead to higher domestic natural gas production, lower U.S. natural gas prices, and therefore, greater natural gas exports. Most of the increase in natural gas trade is from LNG exports, which grow to 8.4 Tcf (23 Bcfgd) in 2040.

However, LNG exports are highest in a case with high world oil prices. In the High Oil Price case, when consumers move away from petroleum products when other energy sources become economically favorable, global LNG demand increases and U.S. LNG exports reach 9.2 Tcf, or 25 Bcfgd. Compared with other LNG suppliers, U.S. LNG has the advantage of domestic spot prices that are less sensitive to global oil prices.

For full news : http://www.worldoil.com/news/2017/2/24/eia-lng-exports-expected-to-drive-growth-in-us-natural-gas-trade

U.S. refiners cut output as gasoline glut hurts profits

U.S. refiners are cutting output to reverse slumping profit margins due to record high inventories ahead of the critical summer driving season.

Profits for making gasoline have hit their lowest levels for a year as higher prices at the pump combine with the seasonal lull in demand from motorists to cut consumption and push up inventories.

Refiners are hoping that cutting runs will prevent a repeat of last winter, when the industry amassed huge gasoline stockpiles that even a record summer driving season failed to draw down.

At least three refineries have cut runs, according to executives and industry sources. More are expected to follow if routine maintenance shutdowns don’t ease the supply glut, said Mark Broadbent, refinery analyst at Wood Mackenzie.

Marathon Petroleum Corp has cut production by 11 percent to 195,000 barrels per day (bpd) at its Catlettsburg, Kentucky, refinery over the past month, a source familiar with the plant’s operations told Reuters on Tuesday.

PBF Energy has cut runs at two plants, Chief Executive Tom Nimbley told investors last week.

The company ran its 180,000-bpd refinery in Toledo, Ohio, at reduced rates in the fourth quarter due to weak margins, he said.

PBF also shut the sweet crude unit at the company’s Chalmette, Louisiana, refinery for economic reasons.

Refiners producing fuel that was going into storage should be concerned about being “on a fool’s errand,” Nimbley said

Marathon declined to comment on the cut in Catlettsburg.

The cuts come even as refiners shutter unit for seasonal maintenance after winter demand subsides. The shutdowns should help eat into inventories.

More refiners will follow suit and cut runs if stockpiles are still high when the maintenance season ends, Broadbent said.

U.S. gasoline stocks rose by 2.8 million barrels to a record 259 million barrels last week, according to the latest data from the Energy Information Administration.

U.S. gasoline margins sank on Tuesday to their lowest levels in a year.

U.S. refiners are expected to spend $1.26 billion on planned maintenance next year, up 38 percent from this year and the highest level since at least 2010, according to Industrial Information Resources (IIR), which tracks labor supply for refiners and other industrial companies.

Last winter, U.S. refiners switched to maximum gasoline yields earlier than usual, leading to huge stockpiles and the industry’s worst financial performance in years.

Refiners would be foolish to repeat that mistake this year, Nimbley said.

“We’ve got to really look at these inventories, and shame on us if we fall into the same trap that we did last year,” he said.

For full news: http://www.reuters.com/article/us-refinery-operations-marathon-pete-cat-idUSKBN1602QR