Midwest gasoline rises as refiners caught short

Cash differentials for gasoline jumped in the U.S. Midwest's Group 3 markets on Wednesday as some refiners were caught short of the regional pipeline carrier's line fill requirements, traders said.

Pipeline operators require shippers to hold a set amount of oil or products inventory to guarantee that they can ship at least that much, known as the minimum line fill requirement. Magellan, the pipeline operator for the Group 3 market, reallocates line fill levels on the seventh of every month based on shippers' past loading volumes.

Ahead of Wednesday's rebalancing, Group 3 V-grade gasoline (RUV-DIFF-G3) gained 9 cents to trade 9 cents per gallon above the RBOB gasoline futures benchmark THU1! on the New York Mercantile Exchange, market participants said.

Group 3 diesel (ULSD-DIFF-G3) gained three quarters of a cent to trade 3 cents lower than the ultra-low sulfur diesel futures benchmark UHO1!, they said.

Elsewhere in the Midwest, Chicago CBOB gasoline (CBOB-DIFF-MC) gained 2 cents​ to trade at parity with futures. Chicago ULSD (ULSD-DIFF-MC) also gained 2 cents to trade 2 cents above futures.

Exxon Mobil said on Wednesday its 251,800 barrel-per-day refinery in Joliet, Illinois, one of the largest fuel suppliers to the Chicago area, has restarted some units and is in the process of ramping up production. The refinery was shut last month after a tornado knocked out its power, sending fuel prices surging in the region.

In the U.S. Gulf Coast, trading of distillate fuels rolled over on Wednesday to the Colonial Pipeline's 46th cycle of deliveries to New York Harbor.

Gulf Coast 62-grade ULSD (ULSD-DIFF-USG) fell quarter of a cent to 9.75 cents under futures, traders said.

M2 conventional gasoline (RU-DIFF-USG) fell half a cent to 4 cents below futures, while A2 CBOB gasoline (CBOB-DIFF-USG) fell quarter of a cent to 13.5 cents below futures, they said.

In New York Harbor, M2 conventional gasoline (RU-DIFF-NYH) was little changed at 2.5 cents per gallon above futures, traders said. Diesel for delivery in the Harbor (ULSD-DIFF-NYH) was also unchanged at 4.25 cents under, they said.

U.S. gasoline stocks (USOILG=ECI) rose by 1.3 million barrels in the week ended Aug. 2 to 225.1 million barrels, the U.S. Energy Information Administration said on Wednesday. That compared with analysts' expectations for a 1 million-barrel drop, according to a Reuters poll.​

EIA said distillate stockpiles (USOILD=ECI), which include diesel and heating oil, rose by 949,000 barrels in the week to 127.8 million barrels, versus expectations for a 241,000 barrel rise.

Refinery crude runs (USOICR=ECI) rose by 252,000 barrels last week, EIA data showed. Refinery utilization rates (USOIRU=ECI) rose by 0.4 percentage points.

RBOB futures rose 3.11 cents to settle at $2.3573 a gallon on Wednesday​. ULSD futures rose 5.98 cents to $2.3556, breaking a four-session declining streak.

The U.S. Environmental Protection Agency has launched investigations into the supply chains of at least two renewable fuel producers amid industry concerns that some may be using fraudulent feedstocks for biodiesel to secure lucrative government subsidies.

Renewable fuel (D6) credits (RIN-D6-US) for 2024 traded up from 58 cents each to 61 cents each, compared to between 55 cents and 54 cents each in the previous session, traders said. Biomass-based (D4) credits (RIN-D4-US) last traded at 60.5 cents each, compared with 55 cents each in the prior session, they said.