UPDATE 2-Sunoco's NJ refinery stopped production

(Adds details and quotes from conference call)

By Haitham Haddadin

NEW YORK, Nov 5 (Reuters) - Sunoco Inc (SUN.N) said Thursday it is pressing on with idling its 145,000-barrel-per-day Eagle Point refinery in New Jersey, where all processing units ceased production this week.

Sunoco's third-quarter crude oil utilization rate fell to 74 percent, reflecting planned work at the Toledo, Ohio, refinery and a one-month maintenance on a gasoline-making fluid catalytic cracker at the Philadelphia refinery, the company added in its quarterly earnings release. [ID:nWNAB1401]

The utilization rate is down from 78 percent in the second quarter for the the northeastern U.S. refiner, whose chairman and chief executive officer, Lynn Elsenhans, on Thursday painted a bearish business outlook.

"We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and additional global supply," Elsenhans said in the statement.

Valero Energy Corp (VLO.N) and Flying J have already idled refineries while others have cut run rates at their refining complexes as demand for refined fuels such as gasoline or diesel was curtailed due to the economic downturn.

Philadephia-based Sunoco reported a quarterly loss of $312 million compared with a year-ago profit of $549 million.

Sunoco has taken cost-cutting steps, including its Oct. 6 announcement of indefinitely idling Eagle Point, "an effort to reduce losses in our refining business at a time when weak demand and increased global refining capacity have created margin pressure on the entire refining industry," the CEO said.

Sunoco expects the Eagle Point refinery, located in Westville, New Jersey, to be in "full mothball mode" by year end, the CEO said in a conference call later on Thursday.

Sunoco also said it would lay off the plant's 400 workers.

To make up for the output shortfall, Sunoco plans to ramp up rates at its 178,000-bpd Marcus Hook and 335,000-bpd Philadelphia plants in Pennsylvania so overall production will be consistent with recent periods, company executives added.

The Northeast U.S. refiner's net refinery production was 669,200 bpd in the third quarter, down from 720,200 bpd in the second quarter, according to the presentation's slides.

On Oct. 6, a Sunoco official said it would take between four and six weeks to process the crude inventory to completely idle the Eagle Point refinery for the indefinite shutdown.

At the time, Sunoco executives said the simplest way for the independent refiner to cut costs was idling Eagle Point since it is the least interconnected with the rest of the Sunoco refining, retail and logistics network. (Editing by David Gregorio)