US Cash Crude - Grades weaken on lag in refiner demand

NEW YORK, Sept 9 (Reuters) - U.S. cash crude differentials mostly weakened, led by heavy and sour crudes, as U.S. refiners including Valero reduced their crude processing, especially through scaling back heavy oil cokers.

Bonito Sour fell 15 cents to trade for $1.05 a barrel below West Texas Intermediate. Mars sour fell 20 cents to $3.50 below a barrel, and Poseidon was down 30 cents to trade for $3.60 below WTI.

Valero, the largest U.S. refiner, said it was running its U.S. coker facilities at 80 percent of capacity and has temporarily shut some of them, due to lagging fuel demand.

Valero said Tuesday it would shut the coker unit and gasifier complex at its Delaware City, Delaware, refinery and keep a gasoline-making FCC unit and a coker idled indefinitely at its Corpus Christi, Texas, refinery, all for economic reasons.

Market watchers keep a close eye on Valero, which has 16 refineries and about 3 million barrels per day (bpd) in processing capacity, as the refining industry's bellwether.

In futures markets, U.S. benchmark crude for October delivery rose 43 cents a barrel to $71.53 after settlement, spurred higher by American Petroleum Institute weekly data that showed U.S. crude stocks fell a more-than-expected 7.2 million barrels last week.

The spread between barrels for October and November delivery narrowed to 39 cents in favor of November crude, down from 42 cents a barrel late Tuesday. A narrowing contango spread often weaken grades.

The trans-Atlantic spread, which measures WTI against Brent futures, narrowed to $1.58 a barrel in favor of WTI, down from $1.73 a barrel on Tuesday. WTI compete with imports priced against Brent.

Among other grades, Thunder Horse light sour was down 10 cents to $2.40 a barrel under WTI. Light Louisiana Sweet rose as much as 20 cents a barrel to 95 cents above WTI. West Texas Sour

for November delivery sold Wednesday for West Texas Intermediate minus 80 cents, down 15 cents, traders said.

California buyers, following WTI front-month futures, raised posted prices by 20 cents. --------------------------------------------------------------

See for Reuters' generic refining margins

See for the WTI front/second month spread

See for front month WTI/Brent futures spread

See for Reuters' assessment of Dated Brent

See for Reuters assessed tanker rates

See for assessed domestic crude differentials

See for outright U.S. cash crude prices

See for a list of U.S. refinery outages

See for U.S. EIA inventory reports and forecasts

See for recent cash crude deals --------------------------------------------------------------

(Reporting by Joshua Schneyer; Editing by Lisa Shumaker)

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