Weekly California R99 Market Insight

California R99 differentials weaken in well-supplied market – California R99 head of the pipeline differentials against CARB ULSD + attributes in Los Angeles fell by 57pc, while those against CARB ULSD + attributes in San Francisco fell by 14pc, over the week ended 15 December.

Renewable diesel production capacity is set to double by the end of 2027. With this anticipated growth over the coming years, it is critical to ensure fair and reflective values are provided for market participants. As the leading source of global renewable diesel pricing intelligence, this weekly market insight will shine a light on this relatively new and fast paced market and provide visibility to price indicators. 

Differentials have lowered this month as volumes obviate the Panama Canal backlog and get transported around Latin America to the US west coast.

Ample supply from abroad is also making its way to California. Vessel-tracking data compiled by Argus indicate the state is set to receive a maximum of 616,000 bl of renewable diesel from Singapore and the Netherlands in December. This compared to 476,000 in the same period last year.

At the offtake level, R100 pricing in California has flipped to a steady premium over R100 in Oregon after Oregon Clean Fuels Program (OCFP) credits plunged on 26 October.

OCFP credits ended the week 37pc lower from 25 October, before credits started their decline. Second quarter data released early in November helped explain some of the credit's precipitous collapse. Renewable diesel consumption in the spring quarter rose to about 14pc of the liquid diesel pool, making up 35pc of the record 660,000 t of credits generated during the period. Spot OCFP's premium to LCFS was more than $56 through the second quarter and rose to more than $100 in September before the recent plunge. The surge in new credits have pressured both the continued premium for Oregon to California LCFS and the maximum achievable value renewable diesel producers can garner selling into Oregon.

The price of R100 delivered to Oregon had moved to a discount over R100 delivered to California's larger and more liquid Low Carbon Fuel Standard (LCFS) program on 7 November for the first time since 2 February, when it briefly reached a slight discount — but more RD hitting Oregon has inverted that spread for over a month now.

Renewable diesel suppliers, including Diamond Green Diesel partner Valero, had previously acknowledged in its 3Q earnings call turning their attention to the smaller Oregon market this year as it maintained its premium to the much larger California program.

Author Jacqueline Reigle

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Argus launched independent price assessments for the California R99 spot market in November, to help drive enhanced visibility. Learn more about these prices. 

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