The EIA was only slightly less concerned about gasoline stocks, which have fallen during the past two weeks. While the declines were relatively mild - 800,000 bbl for the week ended June 18, for example - the agency noted even that is beyond the norm.

"In a month when gasoline inventories are usually fairly stable, any decline, especially considering their already low levels, is worrisome," it said, noting stocks continue to linger below the lower end of the average range. "Without significant volumes of gasoline available in inventories, the system will find it difficult to quickly respond to any surges in demand or reductions in supply related to infrastructure problems."

The stock draws came despite year-on-year increases in gasoline production and imports. Production on a four-week average was at 8.713-mil b/d for the week ending Jun 18, according to the EIA, compared with 8.51-mil b/d last year; the year-to-date 2004 average was 8.55-mil b/d, compared with 8.23-mil b/d in 2003.

Gasoline imports on a four-week average were at 948,000 b/d, compared to 824,000 b/d during the same period in 2003. Imports may not remain so strong in the near future. Weaker US gasoline prices have signaled that the market is better supplied, shutting the trans-Atlantic arbitrage."The arb window has been closed for about 10 days and the August NYMEX contract has to strengthen for trans-Atlantic cargo volume to increase," said one trader commented.

US gasoline prices have weakened dramatically over the past month. The front-month NYMEX contract has slipped over 30 cts/gal from its all-time high of $1.4578/gal on May 24. July unleaded gasoline settled at $1.2015/gal Jun 23. US spot gasoline market differentials against the NYMEX have also weakened, reflecting a more comfortable supply situation.

The US West Coast, however, remains a bullish island. After weeks of relative calm, the US West Coast refining system this week appears to be experiencing a revived string of unplanned problems, several sources said.

On June 23 Valero was rumored to have reduced crude runs amid reactor problems within its reforming complex over the past few days at its 148,000 b/d Benicia, California refinery, according to several market sources. A company spokesman was unavailable for comment. This latest reported San Francisco-area gasoline-unit blip added to spot gains made this week in the USWC products market. San Francisco CARBOB climbed 8 cts/gal from June 22, confirmed done $1.5450/gal, $1.58/gal then $1.60/gal Wednesday. L.A. CARBOB was up 5 cts/gal from June 22, heard done as high as $1.55/gal June 23. Acceleration began Monday after news spread that Shell shut an FCC at its Martinez, CA refinery June 18 for unplanned maintenance.

ConocoPhillips was rumored on June 23 to have shut a diesel hydrotreater at its 90,250 b/d refinery in Ferndale, WA over the weekend of June 19-20 amid catalyst problems, sources said. The unit reportedly will be shut for a week until the catalyst can be replaced, sources said. CP/Ferndale lists three units with a combined 53,280 b/d of catalytic-hydrotreating capacity. Late June 23 a ConocoPhillips spokeswoman was checking on issues that were outside normal "day-to-day operations." Portland EPA was talked up at least 3 cts/gal on the reports, pegged $1.22-$1.26 cts/gal versus June 22 $1.1875-$1.1925/gal.

California EPA and CARB diesel markets also jumped on other rumors of distillate-production problems at the company's 76,000 b/d refinery in Rodeo, CA., sources guessed June 23. While no specifics were confirmed, L.A. CARB diesel levels gained 5.25 cts/gal on speculation, heard done $1.2725/gal. Bay CARB diesel was pegged at least 6 cts/gal over Los Angeles a gain of 3.50 cts/gal from the June 22 regrade. L.A. EPA was confirmed done $1.23/gal up 4 cts/gal on June 23.

Meanwhile, ChevronTexaco June 16 downed a jet hydrotrain unit at its 225,000 b/d refinery in Richmond, CA, an environmental specialist with the Contra Costa County Health Department, the local government body that oversees incidents for four Bay-area refineries. The shutdown of the unit involved "no flaring," the specialist said. A ChevronTexaco/Richmond spokesman Wednesday could not be reached for comment.

The jet hydrotrain in question is likely ChevronTexaco's proprietary name for a jet hydrotreater, a source said. The unit removes sulfur from jet fuel. Although there are no low sulfur jet rules in California, ChevronTexaco runs sour crude and desulfurizes jet to meet regular specifications, a source said. ChevronTexaco lists four hydrotreaters at its Richmond, CA refinery each ranging in capacity from 19,000 to 50,000 b/d. California jet levels were talked unchanged on the news in lieu of ample imports, sources said June 23.