OREANDA-NEWS. Last week's draw in crude inventories at the midcontinent storage hub in Cushing, Oklahoma, suggests the complex has filled and that refiners will soon see a wider US crude discount to Brent, PBF Energy executive chairman Tom O'Malley said today.

Cushing inventories fell by 514,000 bl to 61.7mn bl, the first week-to-week decline in 20 weeks. Greater volumes of crude moving beyond Cushing to the US Gulf coast would resume pressure on waterborne barrels, O'Malley said during a conference call to discuss earnings.

Iranian crude supplies would return to the global market faster than some may expect, further swelling global supply, he added.

"I think ASCI is going to have to stay pretty wide to maintain its volume in our marketplace," O'Malley said, referring to an Argus assessment of US deepwater sour crudes used to price Saudi crude and other imports. "I for one see a little bit of widening of differentials."

PBF anticipates running 70,000 b/d to 75,000 b/d of railed crude during the second quarter, well below the refiner's roughly 180,000 b/d of capacity.

"We downsized that in the first quarter and will continue that in the second quarter as long as those economics remain," chief executive Tom Nimbley said.

Changing from waterborne to rail would take roughly 30 to 45 days, the company said. PBF can divert rail shipments to other refiners in the region if it picks up distressed waterborne cargoes, but the slate for the second quarter was effectively set, executives said today.

PBF can run up to 130,000 b/d of Bakken crude and 80,000 b/d of heavy Canadian in its refining system. The refiner also runs medium sours and waterborne heavy crudes, such as Maya.

"It is a real big advantage for us on the east coast to be able to run any type of barrel," Nimbley said.

Cold and icy conditions in the northeast and midcontinent complicated operations during the first quarter and led to mechanical problems at the Toledo, Ohio, and Paulsboro, New Jersey, refineries, the company said. PBF refineries produced at 464,900 b/d during the first quarter, including 144,900 at the company's 170,000 b/d refinery in Toledo.

PBF completed tie-ins on a chemicals project at the Toledo refinery that will speed completion of that project later this year. A hydrogen plant financed by a third party at the 190,000 b/d refinery in Delaware City, Delaware, was in the permitting stage and expected to finish construction in mid-2017. The company was reviewing a potential project that would boost chemicals production while meeting federal sulfur requirements for gasoline at the 185,000 b/d refinery in Paulsboro.

PBF reported a profit of \$87.3mn, up from \$77.4mn in the same quarter of 2014.