U.S. Chicago gasoline strengthened versus futures to the narrowest differential in three weeks after a government report said inventories fell to the lowest seasonal level in more than two decades. Crack spreads widened.
The discount for conventional, 85-octane gasoline, or CBOB, in Chicago slid 4 cents to 9 cents a gallon against New York Mercantile Exchange futures at 2:35 p.m., the least since June 13. Conventional gasoline in Group 3 gained 0.75 cent to 7.75 cents a gallon under futures.
Differentials narrowed after the Energy Information Administration said that gasoline stockpiles in the U.S. Midwest, known as PADD 2, fell 1.56 million barrels to 48.4 million in the week ended June 28, the lowest level for the end of June since the government started tracking data in 1990.
“The Midwest is still playing catch-up and not running at full capacity,” said Ed Malloy, president of Danaher Oil Co. in Fairfield, Iowa. “Minor issues still exist.”
Inventories, which slumped to a five-month low during the peak of Midwest refinery maintenance, climbed in the previous five weeks as plants including Exxon Mobil Corp.’s Joliet refinery and Phillips 66’s Wood River plant, both in Illinois, finished work.
Refineries in the area processed 3.4 million barrels of crude and other feedstock last week, a utilization rate of almost 91 percent, according to data from the EIA, the Energy Department’s Statistical Arm.
Last week, the Midwest was hit by storms that affected operations at Citgo Petroleum Corp.’s 170,500-barrel-a-day Lemont, Illinois, plant.
HollyFrontier Corp.’s Tulsa East, Oklahoma, refinery, which began a turnaround in May, is expected to start up this month, said a person familiar with operations. The 70,300-barrel-a-day plant planned repairs on a crude unit, naphtha hydrotreater and panex unit, according to company earnings calls.
The 3-2-1 crack spread in Chicago, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, widened $1.65 to $16.89 a barrel. The same spread gained by 97 cents to $17.56 a barrel in Group 3, which includes states north of Oklahoma to Minnesota and North Dakota.