REFINERY MARGIN TRACKER: Massive storm wreaks havoc as it sweeps up US Atlantic Coast

Tight supply and rising demand lifted weekly margins across the globe with US Atlantic Coast margins showing the impact of the massive cold front and storm which swept in over the weekend, an analysis from S&P Global Platts showed on Jan. 31.

USAC temperatures have been in and out of the midteens for the past few weeks, prior to the blizzard dropping varying amounts of snow along the seaboard over the weekend, resulting in 23 inches of snow in Boston.

The persistent cold weather in the USAC has increased oil demand, with 25%-30% of all USAC power generation being produced by oil, according to market sources, as the cold weather has increased demand for natural gas.

With Mid-Atlantic and New England distillate inventories holding just above all-time lows, January fuel oil imports into the USAC averaged 139,000 b/d, 43,000 b/d higher than January 2021 volumes. This is 13,000 b/d higher than December's volumes, with most barrels into the Mid-Atlantic coming from Northwest Europe and those in New England coming from Canada, according to data from Kpler data tracking service.

Fuel oil volumes imported into the USAC for the week ending Jan. 28 averaged 282,000 b/d, well over the 137,000 b/d four-week average, Kpler data showed.

The price for NYH No. 6 fuel oil cargos is averaging $77.31/b so far in the first quarter of 2022, up from the $69.57/b in the fourth quarter of 2021, according to S&P Global Platts prices assessments.

Refinery impact

USAC refineries also felt the impact of the extreme cold. Sources familiar with the subject said Phillips 66 took down the 145,000 b/d gasoline-making fluid catalytic cracking at its Bayway refinery in Linden, New Jersey, as cold weather shut the gas compressor at its associated cogeneration facility early Jan. 31.

A Phillips 66 spokesperson declined to comment but said there was no planned work underway at the plant.

Despite the extreme cold, gasoline demand along the USAC rose 9.9% last week, as total US weekly gasoline demand rebounded the eight-month low seen the week earlier.

According to GasBuddy retail tracking data, weekly total US gasoline demand rose 6.2% from the prior week, and 1.9% above the four-week rolling average.

"Weather again likely played a key role in shifting gasoline demand. Saturday demand was up just 0.1% from the prior Saturday," said Patrick De Haan, head of media at GasBuddy.

While USAC cracking margins were up week on week, they tapered off by week's end due to the travel advisories put into place by many Atlantic seaboard states.

USAC Bonnie Light cracking margins, according to S&P Global Platts Analytics margin data, averaged $11.69/b for the week ended Jan. 28.

Platts Analytic data showed Jan. 28's margin fell to $13.88/b from Jan. 27's $14.27/b on expectations of lower USAC gasoline demand next week as storm travel advisories put into place kept drivers off the road on Jan. 29 and Jan. 30.

PBF said to restore Paulsboro's offline capacity

But in the longer term, gasoline demand is expected to rise, and, to meet this demand, market sources said that PBF Energy is getting ready to restart the section of the Paulsboro refinery it shut at the beginning of the coronavirus pandemic.

A company spokesman said he was unable to comment on the status of the refinery, particularly ahead of PBF's fourth quarter results call to be held Feb. 10.

The gasoline-making fluid catalytic cracking unit was one of the units idled in January 2021, along with the coker, the reformer, the alkylation unit and the smaller of the two crude units.