Chicago gasoline reached a three-week high against futures in New York as regional demand climbed and premium gasoline soared, signaling possible refinery upsets.
Conventional, 85-octane gasoline, or CBOB, in Chicago advanced 5.25 cents to a premium of 0.75 cent a gallon versus futures at 2:38 p.m. It was the biggest jump since Sept. 17 and strongest position since Sept. 20. The premium gasoline grade rose to a two-month high of 54.5 cents above futures.
“There was quality demand earlier in the day and with the premium no lead gasoline moving up, that was also bullish,” said Ken Malloy, a broker with Fairfield, Iowa-based Danaher Oil Co. The demand was mostly in East Chicago, he said.
Phillips 66’s Wood River, Illinois, refinery, which was carrying out planned maintenance as of Oct. 8, reported a compressor trip that resulted in flaring yesterday. BP Plc last week shut a crude unit for repairs at its Whiting, Indiana, site, the largest in the U.S. Midwest.
Exxon Mobil Corp.’s Joliet, Illinois, plant cut rates by an unspecified amount after an electrical fault on Oct. 5, a filing showed. The company declined to comment further.
The Wood River, Whiting and Joliet refineries have a combined capacity of about 1.01 million barrels a day, according to data compiled by Bloomberg.
Aside from refinery issues, Chicago gasoline prices may have seen a boost because of retailer demand, said Patrick DeHaan, a gas analyst at GasBuddy.com. Prices at the pump in Illinois averaged $3.453 a gallon today, compared with $3.436 a week ago, according to the company’s website.
“Any demand surge was likely tied to retailers filling their tanks after motorists poured in to beat retailers raising their prices,” DeHaan said.
Stockpiles of gasoline in the U.S. Midwest, known as PADD 2, dropped 835,000 barrels to 49.3 million in the week ended Oct. 4, according to U.S. Energy Information Administration data. That was the first decline in five weeks.
The 3-2-1 crack spread in Chicago, a rough measure of refining margins for gasoline and diesel based on West Texas Intermediate oil in Cushing, Oklahoma, gained $2.67 to $14.02 a barrel, the highest level since Sept. 10, according to data compiled by Bloomberg.
Ultra-low-sulfur diesel in the region was unchanged at 10.5 cents a gallon below Nymex futures. The same fuel in Group 3, the region spanning north from Tulsa, Oklahoma, to Minnesota and North Dakota, added 0.25 cent to a discount of 1.25 cents a gallon. Gasoline in the area was at a discount of 10.5 cents.