US Midwest refinery power issues pump up gasoline prices after storms sweep region

Midwestern refiners were seen scrambling for gasoline on July 17 after weekend storms swept through the Great Lakes region, causing tornados and forcing ExxonMobil's 251,800 b/d Joliet refinery in Illinois to shut down after it lost power.

ExxonMobil's Joliet refinery is one of the Big Three among the five refineries serving the Chicago area, along with BP's 435,000 b/d Whiting, Indiana, refinery and the 356,000 b/d Wood River, Illinois plant jointly owned by Phillips 66 and Cenovus. They are complemented by two other refineries: Citgo's 184,414 b/d Lemont, Illinois, plant and Marathon's 243,000 b/d Robinson, Illinois plant.

In a filing with the Illinois Emergency Management Agency, ExxonMobil notified of a flaring due to a loss of power July 15. Market sources said multiple units were shut, including the CDU, an FCC and a catalytic reformer.

"Evidently it is more than that," said one Midwest market source.

"It appears that ExxonMobil has cut off its exchange partners. So Exxon, BP, [Phillips 66] and [Marathon] are all out buying origin barrels," he added, noting BP, Phillips 66 and Marathon are supplied by ExxonMobil.

On July 17, Platts assessments showed Chicago CBOB differentials for both Wolverine and Buckeye barrels had moved into positive territory against the NYMEX August RBOB futures. Wolverine barrels were assessed at a flat price of $2.5213/gal putting it at a 2-cent/gal premium to futures, compared with a 14.25-cent/gal discount on July 16. Buckeye barrels traded at a flat price of $2.5113/gal on July 17, versus July 16 14.25 cent/gal discount, according to Platts assessments, trading at a 1-cent/gal premium to futures. Platts is part of S&P Global Commodity Insights.

In the Midwest, generic Chicago pipeline ULSD was assessed 21.50 cents stronger at NYMEX ULSD August futures plus 3.75 cents/gal on July 17, according to Platts assessments.

"Trouble in Joliet Exxon," said another Midwest market source, who confirmed that BP, Marathon, and Phillips 66 were all seen out buying.

An ExxonMobil company spokesperson said via email July 17 they were checking on the current status of the plant. According to the National Weather Service, an EF-2 tornado touched down just across Interstate 55 from the refinery on July 15. The Enhanced Fujita Scale is used to measure tornados and an EF-1 tornado has 3 second gusts of between 111 mph to 135 mph.

Citgo was seen as a seller into the Chicago market, the first market source said.

"They have the storage. I think it was them selling it all," he added.

This was confirmed by a Citgo spokesperson, who confirmed the Lemont refinery was spared from impact of the severe weather which caused power outages across the region on July 15.

"The Citgo Lemont refinery operations remained stable and reliable through the storm period," the spokesperson said in a July 17 email.

"However, some of our third-party partners experienced issues and we have worked closely with them to ensure supply of product to our customers," the spokesperson added.

A company spokesperson for Marathon declined to comment on operations, while a Phillips 66 spokesperson said Wood River was operating normally. Company representatives for BP were not immediately available for comment.