US west coast (USWC) ultra-low-sulfur diesel (ULSD) inventories ended August beyond a 14-year low, one component of regional overall diesel supply tightness that has contributed to record-high spot prices in California ahead of the fall harvest.
ULSD stocks along the USWC contracted by 8.2pc from week-to-week to just 9.03mn bl by 28 August, the lowest level since June 2012, according to the latest Energy Information Administration (EIA) data. Historically tight diesel availability has already boosted outright prices in Los Angeles this week to record highs, per Argus' series histories for both export-grade EPA and in-state CARB ULSD. Cash prices for both grades reached $4.18/USG for prompt-month spot volume by Tuesday afternoon.
But ULSD makes up just one half of California's diesel market, in which renewable diesel (most often R99) — also tight this season — commands the majority market share. Under typical market conditions, scarcer R99 availability would be expected to translate into higher CARB diesel demand. But refinery closures in the past year have systemically whittled away at California's crude processing capacity and left minimal slack in the supply chain for buyers, who might otherwise toggle between renewable and conventional grades.
The closures of Phillips 66's 139,000 b/d Los Angeles refining complex in late 2025, followed by the indefinite idling earlier this year of Valero's 145,000 b/d Benicia, California, refinery, cost California alone an estimated 17pc of its total refining capacity. That lost capacity now serves to amplify the impact of short-term production upsets in the state, of which at least two are occurring during what market participants say is peak buying time ahead of harvest in California.
Marathon Petroleum reported start-up/shutdown operations on 1 September at its 365,000 b/d Los Angeles refinery in Carson, California, that are expected to last until 15 September. PBF Energy began maintenance at its Martinez, northern California, refinery in late August, and is expected to continue that work into October, per a 17 August announcement.
On the biofuels side, a turnaround at a Bay Area bio-refinery severely curtailed renewable diesel output and is widely believed to have been joined by an interruption from a second nearby bio-refiner, which emerged uncharacteristically as an R99 buyer in both Los Angeles and San Francisco last month.
R99 values for spot pipeline volume in both locations also logged record highs on Tuesday, per Argus price history dating back to September 2023. Los Angeles head-of-pipeline (hop) R99 reached $5.57/USG and San Francisco rose to $5.62/USG.
Altogether, the production declines — both permanent and temporary — have left buyers in the state concerned about their ability to meet anticipated overall fall diesel needs.
