Chicago gasoline jumped to the highest level versus New York futures in more than four years on speculation an area refinery may be purchasing gasoline as it experiences unexpected plant trouble.
The premium for conventional, 85-octane gasoline, or CBOB, in Chicago widened 25 cents to 65 cents a gallon versus futures on the New York Mercantile Exchange at 2:39 p.m., the largest differential since Sept. 15, 2008, and the third consecutive daily advance, according to data compiled by Bloomberg.
“Chicago basis is soaring,” Patrick DeHaan, a Chicago-based gas analyst at GasBuddy.com, said by phone. “It’s highly likely, based on the massive uptick, that one of the area’s largest refineries is out buying gasoline, which would generally translate into a refinery going partially down.”
Some of the biggest plants in the Chicago region include BP Plc’s Whiting, Indiana, refinery, Exxon Mobil Corp.’s Joliet, Illinois, site, Phillips 66’s Wood River plant and Citgo Petroleum Corp.’s Lemont refinery, both also in Illinois. They make up a combined capacity of about 1.18 million barrels a day, according to data compiled by Bloomberg.
BP’s Whiting refinery has been carrying out a crude conversion project since late 2012, while Exxon’s Joliet refinery has been running without major operating units during a turnaround that began in April.
An alkylation unit at the Joliet plant is said to be out of service until next week after crews found more damage than anticipated, according to a person familiar with operations.
Phillips 66 also shut a hydrocracker at its Wood River refinery earlier this week, while Citgo’s Lemont plant experienced a compressor issue, the companies said.
The 3-2-1 crack spread in Chicago, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, climbed $5.67 to $43.57 a barrel.
Gasoline in Chicago traded about 82.49 cents higher than in the U.S. Gulf Coast, according to data compiled by Bloomberg. The discount for conventional, 85-octane gasoline, or CBOB, on the Gulf Coast narrowed 2 cents to 17.75 cents a barrel versus Nymex futures.
The fuel probably strengthened as barrels were sent to the Chicago region, according to DeHaan and Andy Lipow, president of Lipow Oil Associates LLC.
“Some gasoline strength in the Gulf is being helped by gasoline buying up in Chicago due to delays in refiners returning from maintenance,” Lipow, who is based in Houston, said in an electronic message today.
The 3-2-1 crack spread on the Gulf Coast, also based on WTI, dropped 91 cents to $19.49 a barrel. The same spread based in Light Louisiana Sweet oil fell 71 cents to $11.19 a barrel.