MARKETWIRE ALERTS


   
Maria Eugenia Garcia
DTN Energy Editor

   MARKETWIRE ALERTS 

   MarketWire Afternoon News Aug 25th:

   Updated at 5:00 PM ET 

    

   HEADLINES:

    

   - Midwest Spot Prices Vulnerable as Explorer Outage Drags  

- API: Crude Stocks Build by 4.2M Bbl on Week

   - EIA: U.S. Retail Diesel Up 19.8cts on Wk, Hits 4-Year High

   -  EIA: U.S. Gasoline Retail Prices Hit Nearly 3-Month High

   - Analysis: U.S. Diesel Margins Soar on Global Supply Dearth

    

   NEWS

    

   Midwest Spot Prices Vulnerable as Explorer Outage Drags

   Market participants in the Midwest remain mired in an operational standoff 
following an outage on the Oklahoma-originating Explorer Pipeline, leaving spot 
traders reliant on futures markets for immediate price direction.

   Without official guidance on when pipeline fuel transfers will resume 
northward from PADD 3 into PADD 2, physical spot traders remain vulnerable to 
futures volatility on NYMEX when pricing prompt differentials for diesel, jet 
fuel, and gasoline.

   In Tuesday (8/25) trading, ultralow sulfur diesel (ULSD) for September on 
NYMEX was down 2.18cts, or 0.5%, to $4.2459 gallon by 2:20 p.m. ET.

   Accordingly, offers for Midwest Group 3 ULSD were talked at a 12.50cts 
discount to the NYMEX front-month, widening from morning indications of 10cts 
gallon.

   With Gulf Coast shippers largely absent from the region, the persistent 
midstream flow void from Glenpool has stripped depth from Midwest spot trading.

   As true price discovery is sidelined ahead of harvest demand, pricing power 
has effectively shifted to major refiners holding firm offers against minimal 
transaction volume.

   "I think for the most part, the refiners are kind of setting the market, or 
the illiquidity of the market is setting the market," a Midwest fuels trader 
told DTN. "It's one of those two indicators."

   The 1,830-mile pipeline, which transports refined petroleum products 
northward into the Midwest, has been crippled since an August 17 fire that 
knocked out three natural gasoline tanks at its Glenpool tank farm in Tulsa, 
Oklahoma.

   In an update Monday (8/24), Explorer Pipeline Company said the Glenpool site 
has transitioned into a "project management recovery phase" following the fire, 
though no timeline was provided on its restart.

   Market observers warn that any extended delay in restoring Glenpool's 
operations could transform the current pricing standoff into an acute physical 
supply squeeze as Midwest harvest demand accelerates.

   The midstream impasse intersects with an already tight PADD 2 network, which 
continues to absorb processing issues at Phillips 66's 356,000 bpd Wood River 
refinery in Roxana, Illinois, alongside throughput limits at the Lamar 
crossover hub.

    

   API: Crude Stocks Build by 4.2M Bbl on Week

   U.S. commercial crude oil stocks increased by 4.2 million bbl during the 
week ended August 21, following the 328,000 bbl draw recorded the previous 
week, the American Petroleum Institute (API) reported on Tuesday (8/25).

   API reported a stockpile increase of 1 million bbl at the Cushing, Oklahoma, 
delivery point for NYMEX West Texas Intermediate futures, following the 1.438 
million bbl draw reported in the prior week.

   Gasoline inventories declined by 3.2 million bbl, following the 1.076 
million bbl build recorded in the previous week.

   Distillate fuel oil inventories fell by 500,000 bbl, below the 2.797 million 
bbl draw reported the prior week.

    

   EIA: U.S. Retail Diesel Up 19.8cts on Wk, Hits 4-Year High

   U.S. pump prices for diesel surged 19.8cts this week to reach a more than 
four-year high at $5.652 gallon, Energy Information Administration (EIA) data 
showed Tuesday (8/25).

   The national average for diesel is now at its highest since the week ended 
July  4, 2022, when it stood at $5.675 gallon, historical EIA data showed.

   The current average is also $1.944 above year-ago levels, extending the 
previous week's gain.

   California posted the largest diesel price increase in the latest week to 
August 24, jumping 25.5cts to $7.040 gallon. Year-on-year, it rose $2.167.

   The Gulf Coast registered the second-largest gain, climbing 24.4cts to 
settle at $5.481 gallon.

   Prices across the West Coast and the Midwest region rose 20.4cts and 20.1cts 
to $6.407 gallon and $5.636 gallon, respectively.

   The Rocky Mountain region recorded the smallest weekly increase, edging up 
11.0cts to $5.537 gallon.

    

   EIA: U.S. Gasoline Retail Prices Hit Nearly 3-Month High

   The Energy Information Administration reported Tuesday (8/24) that U.S. 
regular gasoline prices climbed by 3.6cts to $4.085 gallon for the week ending 
August 8, reflecting limited supplies and strong demand during the summer 
driving season.

   This was the highest price increase in nearly three months and was 93.8cts 
higher than the same week a year earlier.

   The current national average is the highest price since mid-2022, following 
the surge in gasoline prices after Russia-Ukraine war began, when the average 
reached $4.09 gallon.

   The Rocky Mountain region (PADD 4) saw the steepest weekly increase, surging 
by 7.4cts to $4.359 gallon, the highest jump of any PADD.

   New England (PADD 1A) followed closely with an 8cts weekly rise to $4.026 
gallon.

   On the opposite end, the Midwest (PADD 2) was the sole region to buck the 
trend, edging down a marginal 0.4cts to $3.934 gallon.

   The West Coast remained the most expensive region at $5.147 gallon, up 
6.1cts week-over-week, while the Gulf Coast (PADD 3) continued to offer the 
nation's lowest prices at $3.638 gallon.

    

   Analysis: U.S. Diesel Margins Soar on Global Supply Dearth

   Diesel cracks have rallied to unprecedented levels and are set to stay 
elevated amid a growing divergence between global crude oil and refined product 
balances. The ULSD crack versus WTI last week surpassed $100 bbl for the first 
time in history, compared to $31.51 bbl at the start of the year, and to $42.01 
bbl on February 27, the last trading day before the start of the U.S.-Israeli 
war on Iran. Tightening global supply fundamentals and low fuel inventories 
continue to support product prices, while on the crude oil side, demand 
destruction and workarounds around supply disruptions have led to a 
comparatively much smaller supply deficit.

    U.S. refiners, having been relatively unaffected by the crude supply 
disruption and enjoying easy access to vast export capacity, continue to be in 
a prime position to fill part of the global gap. On the week ended August 14?, 
they processed just shy of 17.4 million bpd of crude oil, the most since 
September 2019, when operable capacity was nearly 800,000 bpd higher, according 
to federal data. Over the past four weeks, domestic refiners utilized 96.8% of 
operable capacity, compared to 96.3% in the same period in 2025. While 
utilization rates have recently narrowed the gap to year-ago levels, refiners 
have this season run this hard for far longer than in a normal year: 
utilization has been above 95% since the end of May, a range usually reserved 
for a few weeks in August. Running near maximum capacity for this long, 
especially after a relatively shallow spring maintenance season, greatly 
increases the risk of refinery outages, which can tilt the already skewed 
supply-demand balance even more, especially given the lack of spare production 
capacity both at home and abroad.

   Near-maximum utilization and months of fine-tuning operations in favor of 
higher jet fuel and diesel yields have led to record output of these products, 
but also imply limited room for further growth. Over the past four weeks, 
combined production of jet fuel and distillate fuel oil ran some 193,000 bpd 
ahead of year-ago levels. Gulf Coast refiners, responsible for the bulk of 
domestic diesel production, have during this time operated at 97.7% of 
available capacity, compared to 96.7% in the same period in 2025. At refiners 
in the Midwest, who provide a quarter of domestic diesel supply, utilization 
averaged 99.9%, according to U.S. Energy Information Administration (EIA) data.

   Diesel Stays Scarce

   The closure of the Strait of Hormuz and war damages to refineries in the 
Persian Gulf have since early March considerably tightened global diesel 
supply. Aside from the direct loss of some 5 million bpd of refined product 
exports, the market had to contend with a still ongoing crude-shortage-induced 
refining lull affecting most of Asia, which sources crude oil primarily from 
the Middle East. Global refining rates, and consequently fuel supply, collapsed 
to their lowest since the pandemic demand shock of 2020.

   At the same time, Ukraine has been stepping up its attacks on Russian energy 
infrastructure, taking offline around a third of refining capacity, 
subsequently leading to refined product export bans and fuel shortages, further 
tightening the screws on the global diesel market. Last month, the ULSD crack 
versus WTI surpassed the previous record high $86.82 bbl reached in October 
2022 after the European Union agreed to ban refined fuel imports from Russia, 
back then the economic bloc's primary diesel supplier, and has been trading 
above this level for the past two weeks.

   The global supply crunch led to record-high U.S. diesel exports putting 
additional strain on inventories. Nationwide distillate fuel oil stocks fell to 
a 30-year seasonal low of 105.6 million bbl on the week ended August 14 down 9% 
year-on-year, 12.8% below the five-year and a whopping 22% below the ten-year 
seasonal average.

   Prices at the pump reflected the tightening market. The national average 
retail diesel price last week surged by 19.7cts to a three-month high $5.454 
gallon, up $1.741 gallon year-on-year.

   Fundamental Differences

   After rallying in the wake of Russia's invasion of Ukraine in February 2022, 
refining margins, despite peaking only two months into the war, took 18 months 
to fall back to pre-war levels. This time, crack spreads have been continuously 
rising with few interruptions throughout the now nearly six-month long conflict 
in the Middle East. The 3:2:1 crack spread versus WTI, a rough proxy for 
refining margins, surpassed 2022 highs several times last month.

   While western sanctions on Russian oil sales have slightly dented supply, 
they mostly led to a rearrangement of global trade flows. This made both diesel 
imports and production significantly more expensive for former buyers of 
Russian crude oil and diesel. This, in conjunction with the need to establish 
new supply chains, kept inventories in key markets low -- global supply, 
however, was largely unscathed. The ongoing disruption in the Persian Gulf, in 
contrast, has removed millions of bpd of unrecoverable actual physical crude 
oil and product supply.

   Depleted fuel inventories, low global refining runs and seasonally rising 
demand are set to support margins moving forward. Refiner crude throughput is 
still trailing year-ago levels on a global scale by some 5 million bpd, and the 
price-induced demand slump in fuels was much less pronounced than the 
logistics-caused demand destruction on the crude oil side. This will keep 
refiners incentivized to run as hard as possible and prioritize diesel yields 
over those of other, less profitable fuels.




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