US Products Outlook-Mogas to weaken on soft demand, imports

NEW YORK, July 6 (Reuters) - Gasoline differentials in the U.S. Gulf Coast and New York Harbor markets were expected to weaken after the Fourth of July holiday weekend on weaker demand and higher imports, dealers said.

Gulf Coast gasoline is expected to maintain the quiet tone reached late last week as supply continues to grow and demand continues to soften as the temperature of economic health remains tepid.

Weak demand has diminished all but the most major refinery glitches as a price and market moving events.

Exxon Mobil said its mammoth Baytown, Texas, refinery returned to normal operations after several recent glitches.

"Everything is operating," a company spokeswoman said.

Though the market for gasoline in the New York Harbor has been holding, especially due to increased demand ahead of the July 4th holiday, values were seen weaker later in the month, amid expectations of rising imports, traders said.

In the Midwest's Chicago market, gasoline differentials were also lower, with the roll from cycle 1 to cycle 2 gasoline pushing differentials about 4 cents lower with the restart of a gasoline-making unit at BP's Whiting refinery last week and sluggish demand.

Distillate differentials were expected to slip over the course of the week in the New York Harbor as more barrels come up from the Gulf Coast with the contango in the benchmark heating oil futures seen encouraging storage for the fall and winter.

"Overall outlook for the week is going to get weaker. Plenty of supply coming up to the Harbor and not a lot of place to store it," one Harbor distillates trader said, adding that the "economy not helping with the jet (fuel)".

In the Gulf, distillate prices will remain supported by the market contango which has pumped barrels of diesel and jet into tankers and over to Europe, trade said. (Reporting by Rebekah Kebede, Janet McGurty, and Haitham Haddadin)