Chicago gasoline strengthened to the highest level versus futures in seven months on concern that Midwestern storms caused disruptions at local refineries and cut rates on product pipelines.
Citgo Petroleum Corp.'s Lemont, Illinois, refinery yesterday reported flaring caused by a power failure, before returning the plant to normal operations. Phillips 66's Wood River refinery, also in Illinois, reported a hyrdrocracker trip, according to the Illinois Emergency Management Agency. The plants have a combined capacity of 526,500 barrels a day.
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Pipelines including Buckeye Partners LP's Badger line may be operating at reduced rates following the storms, said Patrick DeHaan, a Chicago-based analyst at GasBuddy.com. Badger, operated by West Shore Pipeline Co., transports gasoline, diesel and jet fuel in the Chicago area.
The premium for conventional, 85-octane gasoline, or CBOB, in Chicago gained 7.5 cents to 24.5 cents a gallon above futures on the New York Mercantile Exchange at 4:02 p.m., the highest level since Sept. 19, according to data compiled by Bloomberg. Ultra-low-sulfur diesel strengthened 3.25 cents to a premium of 15 cents a gallon.
"There are extensive issues occurring because of the weather and heavy rainfall," DeHaan said in a phone interview. "We're aware of several refinery issues and this is in addition to lower rates on pipelines in the area."
An e-mail to David Boone, a Buckeye company spokesman, was not immediately returned.
Chicago gasoline versus the same fuel on the Gulf Coast widened by 6.5 cents to 37.5 cents a gallon, while diesel fuel expanded by 3 cents to 16.25 cents higher, according to data compiled by Bloomberg.
"Buckeye has a big pipeline presence in the area, so any power outages or physical disruptions means prices are going up," DeHaan said today. "We're seeing wholesale prices going up already in the Great Lakes region."
Among the areas experiencing higher prices are Akron, Ohio; Grand Rapids, Michigan; and Gary, Indiana, he said.
The 3-2-1 crack spread in Chicago, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, rose $2.86 to $37.60 a barrel, a seventh consecutive advance. The crack spread on the Gulf, also based on WTI, increased 42 cents to $26.02 a barrel.
The margins based on Light Louisiana Sweet oil in the Gulf gained 27 cents to $14.02 a barrel, the highest level since Feb. 25, according to data compiled by Bloomberg. Conventional, 85- octane gasoline, or CBOB, in the region advanced 1 cent to a discount of 13 cents a gallon below futures.