Midwest refinery troubles help spur a rally in fuel prices

NEW YORK (Reuters) - A spate of refinery outages in the U.S. Midwest spurred in part by extreme cold weather has helped cash fuel prices rally in Chicago, boosting gasoline prices amid a margin-crushing glut, traders said on Thursday.

FILE PHOTO - Steam is seen above Lake Michigan during subzero temperatures carried by the polar vortex in Chicago, Illinois, U.S., January 30, 2019, in this picture obtained from social media. Mandatory credit IRSHAAD GOEDAR/via REUTERS

Harsh winds brought record-low temperatures across much of the Midwest, causing at least a dozen deaths and forcing residents who pride themselves on their winter hardiness to huddle indoors.

BP PLC and Husky Energy’s jointly owned refinery in Toledo, Ohio, was running at modestly lower rates due to operational issues related to the extreme cold weather, according to a source familiar with the plant’s operations.

Citgo Petroleum cut production at its 167,000 barrel-per-day refinery in Lemont, Illinois, on Wednesday due to issues related to the extreme cold weather, a source familiar with the plant’s operations said.

Marathon Petroleum Corp shut down the 95,000 bpd crude unit at its 240,000 bpd refinery in Catlettsburg, Kentucky, refinery on Wednesday due to fire, according to a source familiar with the plant’s operations.

The company later shut the 89,000 bpd gasoline-making unit due to operational issues. It was unclear whether the issues were weather related.

Chicago CBOB gasoline cash differentials flipped to trade at a premium to the NYMEX gasoline futures contract this week for the first time since early November. It last traded at 2.00 cents per gallon above futures, traders said.

Chicago ultra-low sulfur diesel last traded at 3.50 cents per gallon below the heating oil futures benchmark, near the strongest level since November. ULSD prices have surged since mid-January, when it traded lower than 30 cents per gallon below futures.

The overall crack spread was at $11.13 a barrel, the lowest seasonally since 2010. Gasoline margins were at $3.89 a barrel, the lowest for this time of year since at least 2005, when Refinitiv began collecting data. Distillate margins were at $25.34 a barrel, the highest seasonally since 2014.

BP PLC’s Whiting, Indiana, refinery, the largest in the region, had to shut its 75,000-bpd crude unit on Saturday due to a small fire. The unit was still shut on Thursday, a source said.

The company fixed steam supply problems on Tuesday and restarted a hydrotreating unit, sources familiar with plant operations said.

Phillips 66 shut a 120,000-bpd crude unit at its Wood River, Illinois, refinery and will likely restart the unit by the weekend, a source told Reuters earlier this week.

Reporting By Jarrett Renshaw Stephanie Kelly and Erwin Seba; Editing by Dan Grebler