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REFINERY MARGIN TRACKER: US Midwest, USAC margins tick higher as USGC plants face another storm

Highlights

Phillips 66 shuts in New Orleans-area refinery ahead of Sally

Midwest refiners gain as USGC plants restart from Laura

New York — Refining margins for US Midwestern refiners and those along the US Atlantic Coast rose for the week ended Sept. 11, while those on the US Gulf Coast dropped as the region prepares for more storms heading their way, an analysis by S&P Global Platts showed Sept. 14.

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As Hurricane Sally bears down on the New Orleans, Phillips 66 has already shut down its 255,600 b/d Alliance refinery in Belle Chasse, Louisiana, while the other area refiners say they are watching the storm closely.

Phillips 66's other large USGC refinery – the 260,000 b/d Westlake refinery – remains shut from Hurricane Laura a few weeks ago, awaiting completion of repairs to the power grid, as is Citgo's 418,000 b/d Lake Charles plant. Almost 1 million b/d of USGC refinery capacity is offline due to the two storms.

Combined with planned and unplanned refinery outages, total crude capacity offline for the region is expected to be slightly over 2 million b/d through September, according to Platts Analytics, or almost one-quarter of the region's total crude processing capacity.

Despite this offline capacity, US Gulf Coast cracking margins for WTI MEH slipped to $5.01/b for the week ended Sept. 11, compared with the $5.14/b the week earlier, according to S&P Global Platts Analytics.

Refiners in the Midwest benefited from the USGC refinery downtime, with WTI Cushing cracking margins rising to $3.63/b for the week ended Sept. 11, compared with the $2.14/b the week earlier.

Coking margins for Western Canada Select also rose week-on-week to average $3.62/b, from $2.44/b.

Talk of a coker snag at BP's 435,000 b/d Whiting, Indiana, refinery combined with harvest demand from the region is supporting higher ULSD prices and margins.

USAC refiners still trim rates, ARA gasoline exports rise

US Atlantic Coast refiners are still holding back on running at anywhere near full rates, supporting a slight tick up in refining margins.

Delta Air Lines 190,000 b/d Trainer, Pennsylvania, refinery is running at about 125,000 b/d and making no jet, a source familiar with refinery operations said.

USAC cracking margins for Bakken crude averaged $3.05/b for the week ended Sept. 11, compared with the $2.76/b the week earlier, as the price of crude dropped. Phillips 66 brings in about 70,000 b/d, or one unit train, of the North Dakota crude to run at its 258,000 b/d Bayway refinery in New Jersey.

However, thanks to the USGC outages, the arbitrage is open for gasoline imports from northern Europe to the USAC to replace Colonial Pipeline barrels. According to commodity tracking service Kpler, about 194,000 b/d are expected to arrive on the USAC from the oil hub of Amsterdam-Rotterdam-Antwerp in the week ended Sept. 11, above the four-week average of 86,000 b/d. .

Higher USAC gasoline exports helped ARA margins, with Bonny Light averaging $1.57/b for the week ending Sept. 11 compared with the $1.36/b the week earlier.

West Coast wildfires, floods and typhoons in China impact margins

On the US West Coast, wildfires continue to spread across Oregon and California, where over 3 million acres have already burned.

California CARB gasoline production dropped by 10.6% to 5.5 million barrels for the week ended Sept. 4, while CARB diesel production increased by 4% to 1.6 million barrels, according to California's Energy Watch, to meet demand from firefighting operations across the state.

But USWC coking margins were down, with Vasconia averaging $10.07/b for the week ended Sept. 11, compared with the $12.45/b the week earlier.

Singapore margins continue to hold in the red, due in part to weak regional demand, but moved up slightly on cuts by Chinese refiners.

The Dubai cracking margin averaged minus $2.41/b, slightly firmer than the minus $3.07/b the week earlier.

PetroChina is expected to cut runs in September to 74% of capacity from the 78% in August due to oversupply of stocks and weak demand as floods and typhoons are capping harvest season demand.

US Atlantic Coast Refining Margin Averages ($/b)

Bonny Light Cracking

Arab Light Cracking

Bakken Crude Cracking

Forties Cracking

Week ending September 11

3.63

1.24

3.05

3.80

Week ending September 04

3.71

1.11

2.76

4.12

Q3 to date

3.58

1.90

3.83

3.46

Q3-19

8.55

4.34

14.25

8.40

Q2-20

2.92

4.46

1.66

3.13

Q1-20

2.56

2.12

8.10

2.86

Source: S&P Global Platts Analytics

US Gulf Coast Refining Margin Averages ($/b)

Arab Light Cracking

WTI MEH Cracking

WCS ex-Nederland Coking

WCS Hardisty Canada Coking

Week ending September 11

0.93

5.01

4.78

-1.34

Week ending September 04

0.95

5.14

5.07

0.40

Q3 to date

1.45

5.09

4.79

0.53

Q3-19

4.86

11.31

13.33

10.69

Q2-20

3.20

4.16

4.70

-1.87

Q1-20

3.05

8.17

9.93

11.19

Source: S&P Global Platts Analytics

US Midwest Refining Margin Averages ($/b)

Bakken Cracking

WTI Cushing Cracking

Syncrude Cracking

WCS ex-Cushing Coking

Week ending September 11

5.16

3.63

4.40

3.62

Week ending September 04

3.79

2.14

4.00

2.44

Q3 to date

5.56

4.17

5.56

4.07

Q3-19

14.39

12.58

11.40

13.46

Q2-20

3.54

3.13

3.86

2.65

Q1-20

9.27

6.79

7.53

8.02

Source: S&P Global Platts Analytics

US West Coast Refining Margin Averages ($/b)

ANS Cracking

Vasconia Coking

Arab Medium Coking

Napo Coking

Week ending September 11

9.33

10.07

6.86

10.33

Week ending September 04

11.33

12.45

8.41

11.02

Q3 to date

9.81

11.22

8.17

9.72

Q3-19

17.58

21.92

16.84

19.27

Q2-20

8.39

7.04

9.30

8.42

Q1-20

14.28

14.19

14.46

16.12

Source: S&P Global Platts Analytics

Singapore Refining Margin Averages ($/b)

Dubai Cracking

Arab Light Cracking

ESPO Cracking

Arab Light Coking

Week ending September 11

-2.41

-2.76

-1.61

-3.15

Week ending September 04

-3.07

-3.60

-2.06

-4.22

Q1 to date

-2.05

-2.21

-1.25

-2.60

Q3-19

3.48

1.12

1.82

0.82

Q2-20

-2.51

3.13

-3.35

2.98

Q1-20

-0.93

-3.86

0.09

-3.20

Source: S&P Global Platts Analytics

ARA Refining Margin Averages ($/b)

WTI MEH Cracking

Bonny Light Cracking

Arab Light Cracking

Urals Cracking

Week ending September 11

0.36

1.57

0.03

0.34

Week ending September 04

-0.27

1.36

-0.87

-0.12

Q3 to date

0.45

1.72

-1.14

0.56

Q3-19

8.37

7.71

6.26

7.04

Q2-20

-1.28

1.19

4.80

0.46

Q1-20

1.26

2.36

3.23

5.28

Source: S&P Global Platts Analytics

Italy Refining Margin Averages ($/b)

Urals Cracking

CPC Blend Cracking

Arab Light Cracking

WTI MEH Cracking

Week ending September 11

-0.12

1.38

-1.58

-0.61

Week ending September 04

-0.49

1.61

-2.13

-0.85

Q3 to date

0.16

2.14

-2.00

-0.01

Q3-19

5.09

8.47

4.94

7.57

Q2-20

-1.31

3.01

2.95

-2.98

Q1-20

4.40

6.00

1.92

0.03

Source: S&P Global Platts Analytics