Midwest Gasoline Jumps to Four-Year High on Supply Worry

Midwest gasoline jumped to the highest level in more than four years on speculation shipments have been delayed along Explorer Pipeline Co.’s pipeline, further lowering supplies in the region.

The Explorer line transports gasoline, diesel and jet fuel from the Gulf Coast to the Midwest, according to the company’s website. It can take as few as 11 days to carry a barrel from the Gulf Coast region to Chicago. Gasoline supplies in the PADD 2, or Midwest, sank 1.34 million barrels to 48.7 million in the week ended May 3, the lowest since Nov. 30, U.S. Energy Information Administration data show.

Conventional, 87-octane gasoline in Group 3 gained 10 cents to a premium of 33 cents a gallon over futures on the New York Mercantile Exchange as of 2:38 p.m., the highest level since Sept. 15, 2008, according to data compiled by Bloomberg. Group 3 includes states north of Tulsa, Oklahoma, to Minnesota and North Dakota. Conventional, 85-octane, or CBOB, in Chicago strengthened 7 cents to 24 cents above futures.

“Explorer is running a touch late and guys are scrambling to cover commitments,” said Steve Mosby, vice president of supply consultant Admo Energy LLC in Kansas City, Missouri.

Dolin Argo, a Tulsa-based spokesman with the company, did not immediately return a phone call inquiring about delays.

The 3-2-1 crack spread in Chicago, based on WTI, grew $1.39 to $33.27 a barrel. The Group 3 spread, also based on WTI, increased $2.16 to $34.46 a barrel.


Gasoline on the Gulf was valued 40.47 cents a gallon under the same fuel in Chicago, the biggest gap since May 1.

Gulf Coast gasoline weakened to the lowest level in almost three weeks as Phillips 66 restarted its Sweeny, Texas, refinery and Exxon Mobil Corp. returned a unit to service at its Baytown plant, also in Texas.

Phillips 66’s 247,000-barrel-a-day Sweeny refinery is in the process of starting units after a power failure caused a temporary shutdown of the plant on May 11, according to Rich Johnson, a company spokesman. Restart is expected to “take several days,” he said in an e-mail.

Exxon’s Baytown plant, the second-largest refinery on the U.S. Gulf Coast, started the No. 1 feed pump at a hydrocracker after an earlier shutdown, according to a filing with the Texas Commission of Environmental Quality. With a capacity of 584,000 barrels a day, the refinery is second to Motiva Enterprises LLC’s 600,000-barrel-a-day Port Arthur, Texas, plant.

Conventional, 85-octane gasoline, or CBOB, on the Gulf Coast weakened 0.38 cent to 18.38 cents a gallon below futures at 2:05 p.m., the biggest discount since April 23, according to data compiled by Bloomberg. Ultra-low-sulfur diesel in the region was unchanged for a second day at a discount of 3.5 cents a gallon to futures.

Gasoline Supplies

Stockpiles of motor fuel on the Gulf, known as PADD 3, climbed 919,000 barrels to 72.6 million in the week ended May 3, according to EIA data. Supplies of distillates, including diesel and heating oil, in the region grew 81,000 barrels to 36.3 million, the data show.

Phillips 66’s Sweeny refinery distributes refined products throughout the central and southeastern U.S. by pipelines, barge and rail car, according to the company website. The Baytown plant supplies gasoline to Texas and most states on the U.S. East Coast via pipeline, an Exxon fact sheet shows.

The 3-2-1 crack spread on the Gulf Coast, a rough measure of refining margins for gasoline and diesel fuel based on West Texas Intermediate crude oil in Cushing, Oklahoma, increased 15 cents to $21.39 a barrel, according to data compiled by Bloomberg. The same spread for Light Louisiana Sweet oil gained 55 cents to $12.59 a barrel.

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