Chicago gasoline fell to the lowest level against futures in almost seven weeks as refineries in the region boosted processing and area inventories rose for a second week.
Refiners in the Midwest, known as PADD 2, processed 3.41 million barrels a day in the week ended Feb. 22, an increase of 3.4 percent from the previous seven days. That was 2.6 percent above the five-year average and the biggest increase since November, according to Energy Information Administration data. Regional supplies gained 272,000 barrels to 53.6 million last week, the data show.
“We saw a wild return of refinery utilization in the Midwest,” Oil Outlooks & Opinions LLC said. The increase may be a result of PBF Energy Inc. (PBF:US) returning its Toledo, Ohio, refinery to normal operations after a fire in late January, according to the New York-based industry report.
The discount for conventional, 85-octane gasoline, or CBOB, in Chicago slid 8.5 cents to 32.5 cents a gallon versus futures traded on the New York Mercantile Exchange at 4:03 p.m., the widest gap since Jan. 11. Ultra-low-sulfur diesel in the region slipped 2.75 cents to a premium of 10.5 cents a gallon above heating oil futures.
PBF’s 175,000-barrel-a-day Toledo plant shut a fluid catalytic cracker and cut rates at some process units after a fire broke out near the end of January. The plant returned to normal operations last week, the company said.
The 3-2-1 crack spread in Chicago, a measure of refining profitability for gasoline and diesel based on West Texas Intermediate in Cushing, Oklahoma, slumped $1.09 to $30.05 a barrel. The same spread gained $1.52 to $30.77 a barrel on the Gulf Coast, while the gap for Light Louisiana Sweet in the region rose $1.37 to $10.22 a barrel.
Conventional gasoline on the U.S. Gulf Coast tumbled 21.75 cent to a discount of 25 cents as trading spreads switched to April futures. Reformulated gasoline dropped 1 cent to trade at a discount of 4.5 cents, data compiled by Bloomberg show.
Refiners processed 7.32 million barrels of crude and other feedstock last week, up from 7.14 million in the week-earlier period, according to EIA data. That was the first gain in refinery rates in four weeks.
“A sizable increase in utilization resulted in in a net increase in regional runs,” according to a note from CIBC World Markets Inc., a financial services firm. Most notable was the return of Sweeny from planned maintenance, the note said.
Refineries utilized almost 84 percent of capacity, compared with 82 percent in the previous time period, according to EIA data reported yesterday.
Phillips 66 (PSX:US)’s Sweeny, Texas, refinery was in the process of restarting units after scheduled maintenance that began Jan. 7, according to two people familiar with the operations, who asked not to be identified because the information isn’t public.
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