Chicago Gasoline Jumps After BP Whiting Refinery Fire

An explosion at BP Plc’s 405,000-barrel-a-day Whiting refinery, the largest plant in the Chicago area, almost doubled the premium for gasoline today on speculation that supplies will shrink.

Spot gasoline in the Chicago region was 12 cents a gallon above October futures on the New York Mercantile Exchange today, up from a 7.25-cent premium yesterday, according to data complied by Bloomberg at 12:43 p.m. Ultra low sulfur diesel strengthened by 2.75 cents to a 3-cent discount to Nymex futures, while jet fuel jumped 6.5 cents to a 14-cent premium.

BP had a fire at a 105,000-barrel-a-day hydrotreater late yesterday, and the extent of the damage wasn’t immediately clear, Sugar Land, Texas-based IIR Energy said today.

“I don’t know that BP is out in the market today, but people are trying to step out in front of them,” Steve Mosby, supply manager of ADMO Energy LLC, said by phone from Kansas City, Missouri. BP “says it has minimal impact, but when something goes boom, it’s not nothing.”

The Whiting refinery is the largest plant with a direct connection to Cushing, Oklahoma, the delivery point for West Texas Intermediate crude futures. It completed a $4.2 billion expansion last year, allowing it to process more heavy, high-sulfur crude from Canada. It imported 277,000 barrels of Canadian crude a day in May, making it one of the largest users of that country’s oil, according to the U.S. Energy Information Administration.

Canadian Crude

About 188,000 barrels a day of that Canadian crude was heavy and high in sulfur. The unit where the fire occurred removes sulfur from intermediate feedstocks before they’re further processed in a catalytic cracker to make fuel that meets emissions limits.

The shutdown will limit the refinery’s ability to run high-sulfur crude, David Elpers, a refinery specialist at IIR Energy, said by telephone today.

Western Canadian Select, a blend of heavy, sour crudes, was down 25 cents a barrel to $16.75 below the U.S. benchmark WTI, data compiled by Bloomberg at 12:07 p.m. New York time show. Syncrude, a sweet oil, strengthened 25 cents to a 75-cent discount.

WTI futures on the New York Mercantile Exchange were 57 cents higher at $94.45 a barrel at 12:58 p.m. New York time. The premium of October contracts over November widened 13 cents to 67 cents.

BP said in a statement that a fire had been extinguished at the refinery at 10:55 p.m. local time and that operations had been “minimally impacted.” The plant was still producing fuel for customers, the statement shows.

The Whiting plant supplies enough fuel daily to run 430,000 cars and 22,000 commercial trucks, BP, based in London, said on its website.

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