Midwest Gasoline Strengthens as Refinery Rates Drop

The discount for spot gasoline in the U.S. Midwest narrowed to the smallest against futures in almost a month as refineries processed less crude-oil and inventories fell.

Refiners in the region known as PADD 2 processed 3.39 million barrels a day of crude and other feedstock in the week ended Jan. 11, down 0.6 percent from a week earlier, according to the U.S. Energy Information Administration, a division of the Energy Department. Stockpiles of gasoline in the region retreated 969,000 barrels to 54.4 million.

Exxon Mobil Corp. (XOM) reported a release yesterday at the 238,000-barrel-a-day Joliet, Illinois, refinery, the fifth- largest in the region, a filing with state regulators showed.

The discount for conventional gasoline in the Midwest, or Group 3 region, narrowed 1 cent to 23.5 cents a gallon versus gasoline futures traded on the New York Mercantile Exchange at 4:15 p.m. East Coast time. That’s the smallest discount since Dec. 19. CBOB, or 85-octane gasoline to be blended with ethanol, gained 4.5 cents in Chicago to trade at a discount of 26.5 cents a gallon.

Refinery margins, or cracks spreads, in the U.S. Midcontinent have dropped to the lowest levels in almost a year. The 3-2-1 crack spread between WTI Midland crude and Midcontinent gasoline and diesel narrowed $2.257 a barrel to $23.787, the lowest since Feb. 29.

The spread between conventional gasoline on the U.S. Gulf Coast and the Midwest narrowed 2.25 cents to 8.25 cents a gallon after reaching a four-year high of 33 cents on Jan. 8.

Diesel Fuel

The discount for ultra-low sulfur diesel in the Midcontinent narrowed 0.63 cent to 3.25 cents a gallon below heating oil futures. The same fuel in Chicago narrowed 2 cents to 11.5 cents below futures.

The discount for conventional, 87-octane gasoline on the U.S. Gulf Coast widened 1.25 cents to 15.25 cents a gallon against futures after Motiva Enterprises LLC was said to be restarting the 325,000-barrel-a-day crude unit at the Port Arthur, Texas, refinery.

The unit waas expected to be processing as much as 200,000 barrels a day by the end of the weekend, two people familiar with operations at the refinery said. The plant replaced two 8- to 10-foot (2.4-to-3-meter) sections of a 14-inch (35.6- centimeter) diameter pipe to fix a recurring leak, said the people, who asked not to be identified because the information isn’t public.

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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