US WCoast Products - Gasoline prices drop on inventory increase

HOUSTON, July 11 (Reuters) - Gasoline fell 2 cents on Wednesday in the Los Angeles spot market after the U.S. government reported an increase in West Coast inventory, traders said.

July-delivery CARBOB gasoline finished at a 1-cent premium to August NYMEX RBOB gasoline. CARBOB in the San Francisco Bay market sold at a 3.5-cent discount to NYMEX RBOB.

The U.S. Energy Information Administration said West Coast gasoline inventory rose 68,000 barrels last week to 27.923 million barrels.

August CARBOB sold at 4 cents over September NYMEX RBOB, while September CARBOB traded at 12.5 cents over October RBOB.

July gasoline in the Portland market was discounted 4.5 cents from August RBOB.

CARB diesel in L.A. retreated 1.5 cents to 4.5 cents a gallon over August NYMEX heating oil after the EIA reported a 1.055-million barrel increase in distillate inventory to 12.396 million barrels for the West Coast.

Bay market CARB diesel was at a 3-cent discount to August heating oil.

EPA diesel in L.A. was offered at 3 cents over NYMEX August heating oil.

Diesel in the Portland, Oregon, market was at 11 cents over NYMEX heating oil.

Jet fuel in L.A. was steady at 8 cents a gallon over August NYMEX oil.

CARBOB and CARB diesel formulas are mandated by the California Air Resources Board. CARBOB is a gasoline meant for use with ethanol. CARB diesel is intended to reduce pollution in California's major metropolitan areas.

Ultra-low sulfur diesel, as authorized by the U.S. Environmental Protection Agency, is used outside California's cities. (Reporting By Erwin Seba; Editing by Joseph Radford)