Midwest Weekly: Buckeye CBOB Swings Amid Joliet Concerns


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) - Midwest refined-product spot prices experienced sharp 
volatility this week, with the basis for Buckeye Complex CBOB hitting four-year 
highs before giving back 85% of its gain in just a day.

   The heightened activity in spot gasoline across eastern pipeline networks 
and Chicago during the week ended October 23 was triggered by an operational 
upset at ExxonMobil's 275,000 bpd Joliet refinery. 

   Distillates and jet fuel posted broad gains during the week, while 
Midcontinent spot values declined.

   Chicago CBOB recorded the steepest weekly advance across the Midwest 
gasoline complex, climbing 23.51cts, or 7.10%, to average $3.5445 gallon, DTN 
data showed.

   But Buckeye CBOB captured the most volatility. On Thursday (10/22) alone, 
its spot basis jumped 62cts to a four-year high of $1.00 gallon premium over 
November NYMEX RBOB futures. The rally came after ExxonMobil reported on 
Tuesday (10/20) a process upset that led to a flaring event at the Joliet 
plant. 

   While the operator had not issued an update since, the spot momentum in 
Midwest gasoline cooled abruptly by Friday (10/23), with the Buckeye CBOB basis 
plummeting 85cts to stand a 15cts gallon premium over November futures.

   "In just a day, everything pulled back, raising more questions on near-term 
direction," a Midwest fuels trader told DTN.

   For the week, Chicago CBOB surged 23.46cts, or 6.97%, to average $3.6000 
gallon. CBOB on the Wolverine pipeline advanced 18.46cts, or 5.51%, to average 
$3.5360 gallon.

   Bucking the pipeline rally, Midcontinent Group 3 CBOB fell 11.19cts, or 
3.26%, to average $3.3255 gallon.

   The upward move in physical gasoline was also helped by Energy Information 
Administration (EIA) data which showed PADD 2 motor gasoline inventories up 
just 100,000 bbl during the week ended October 16 to stand at 42.3 million bbl. 
That kept regional gasoline supplies constrained at 3.5 million bbl below 
year-ago levels.

   In distillate trading, Chicago ULSD recorded the largest gain, climbing 
23.43cts, or 4.95%, to average $4.9682 gallon. Buckeye Complex ULSD and 
Wolverine ULSD each advanced 22.08cts, or 4.56%, to average $5.0567 gallon. 
Group 3 ULSD slipped 4.52cts, or 0.89%, to $5.0147 gallon. All four regional 
diesel markets remained more than $2.60 gallon above their year-ago levels.

   Midwest distillate strength was underpinned by EIA data showing PADD 2 
distillate stockpiles drew by 400,000 bbl during the week ended October 16 to 
25.3 million bbl--the lowest regional level logged since June 5.

   In jet fuel markets, Chicago led gains, rising 21.83cts, or 4.97%, to 
average $4.6082 gallon. Group 3 jet fuel advanced 16.73cts, or 3.27%, to 
average $5.2832 gallon. Regional jet fuel inventories recovered by 100,000 bbl 
on the week to 7.3 million bbl, remaining 300,000 bbl below year-ago levels.

   Midwest refinery operations picked up on the week, with PADD 2 capacity 
utilization edging up 0.5 percentage points to 90.2% and crude inputs 
increasing by 25,000 bpd to average 3.860 million bpd.

   Meanwhile, the labor dispute at BP's 440,000-bpd Whiting, Indiana refinery 
remained unresolved, with approximately 800 United Steelworkers Local 7-1 
employees locked out since March, although BP reported operations were 
unaffected.




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