Bloomberg News

Midwest Gas Gains on Refinery Activity at a 2-Month Low

January 24, 2013

Midwest gasoline strengthened to the highest level in nearly seven weeks as the region’s refineries processed the least oil since November, pushing down supplies.

Refinery inputs of crude and other feedstock in PADD 2 sank by 83,000 barrels to 3.31 million barrels a day in the week ended Jan. 18, the lowest level since Nov. 23, according to the U.S. Energy Information Administration, an arm of the Energy Department. Stockpiles of gasoline declined 727,000 barrels to 53.6 million, a second consecutive weekly drop.

Conventional, 87-octane gasoline in the midcontinent, or Group 3 region, rose 3.5 cents to 17 cents a gallon below futures on the New York Mercantile Exchange at 4:15 p.m., the smallest discount since Dec. 10. The gap has narrowed from 43.75 cents on Jan. 8 as supplies diminished and refineries began preparing for maintenance.

Phillips 66 (PSX:US) plans to conduct work starting in late February at the Wood River refinery in Illinois, a person familiar with the turnaround schedule said yesterday.

With the capacity to process as much as 356,000 barrels a day, the Illinois-based refinery is the second largest in the Midwest behind BP Plc’s Whiting, Indiana, plant, which has a capacity of 420,000 barrels.

Chicago, Gulf

Conventional gasoline to be blended with ethanol in the Chicago region gained 2.5 cents to 25 cents a gallon below Nymex futures, a second consecutive advance. Ultra-low-sulfur diesel in the region rose 2.25 cents to 9.5 cents below heating oil futures, while the same fuel was unchanged at a 5 cent discount in the Group 3 area.

Distillate supplies in the Midwest grew 958,000 barrels to 31.4 million last week, the Energy Department reported today. The 3-2-1 crack spread, or measure of refining profitability based on West Texas Intermediate and ultra-low-sulfur diesel, rose $1.23 to $22.65 a barrel.

The 3-2-1 spread in the Gulf Coast, measured by WTI in Cushing, gained 50 cents to $22.90 a barrel. The spread based on Light Louisiana Sweet oil rose $1.70 to $3.90 a barrel.

Conventional, 87-octane gasoline in the Gulf gained 0.88 cent to 18.5 cents a gallon below futures. Supplies of motor fuels in the region dropped 986,000 barrels to 82.8 million, the EIA said.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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