MARKETWIRE ALERTS
Barani Krishnan
DTN Refined Fuels Market Reporter
MARKETWIRE ALERTS
MarketWire Afternoon News Aug 18th:
Updated at 5:00 PM ET
HEADLINES:
- Midwest Cash Fuel Offers Up Amid Explorer Pipeline Outage
- NYMEX ULSD Crack Hits All-Time High on Supply Tightness
- Phillips 66 Borger Refinery Exceeds Opacity Limit
- Flint Hills Reports Flare at Corpus Christi FCC Area
- Fire at Glenpool Pipeline Tank Farm Extinguished
- EIA: U.S. Retail Diesel Up 19.7cts on Wk, Near 3-Mth High
- EIA: U.S. Retail Gasoline Up 4.3cts to 9-Week High
NEWS
Midwest Cash Fuel Offers Up Amid Explorer Pipeline Outage
Cash offers for Midwest gasoline sub-octane CBOB and premium grades climbed
Tuesday (8/18) as sellers raised asking prices following news that Explorer
Pipeline will cease local operations in Oklahoma to facilitate recovery from a
fire.
Prompt sub-octane CBOB offer levels in Group 3 rose from 11.5cts over
September NYMEX at 10:30 a.m. ET to 12.50cts over by 2:00 p.m. ET.
Chicago prompt sub-octane offers jumped to a 4cts premium over the same
benchmark, from previous 6cts and 2cts discounts talked earlier on the day,
according to market sources.
The firming cash offers reflect immediate supply tightness across a regional
distribution network that ships gasoline, diesel, and jet fuel from the Gulf
Coast through the Midwest into the Chicago area.
Although actual transaction volume remained sparse and bids lagged, refiners
and traders pushed asking prices higher to protect prompt inventory locked
behind the terminal suspension.
"Refiners are looking at this as a wait-and-see situation, so sellers are
holding out for higher prices," a Midwest fuels trader told DTN. "With product
sitting locked in terminal front-end tanks, prompt availability gets very tight
very quickly once existing holdings are lifted."
Retail fuel prices also recorded sharp upward momentum across Midwest
distribution networks.
U.S. diesel on average jumped 19.7cts this week to reach a near three-month
high of $5.454 gallon, Energy Information Administration data released Tuesday
showed. Midwest retail diesel posted the largest jump nationwide, escalating
25.4cts to $5.435 gallon during the week ended August 17.
National average gasoline prices also climbed, rising 4.3cts to $4.049
gallon to snap two consecutive weekly declines, with Midwest regular gasoline
surging 12.2cts to $3.938 gallon.
Limited fuel availability in the Midwest was fueled by yesterday's explosion
at the the Glenpool facility serves as a vital midstream junction for the
1,830-mile Explorer system, which transports refined petroleum products
northward from PADD 3 into PADD 2. Explorer Pipeline said in a statement that
local operations in Oklahoma have been paused to focus on "on-site reclamation
and remediation process".
The operational friction at Glenpool intersects with an already tight
regional market, where recurring logistics bottlenecks have whipped cash prices
around and forced distributors to scramble for prompt replacement barrels.
Midwest fuel distribution channels have faced heightened volatility due to
recent hiccups at Phillips 66's 356,000 bpd Wood River refinery in Roxana,
Illinois, and throughput issues at the Lamar terminal pipeline junction near
the Colorado-Kansas border.
During Monday's blaze, a neighboring Phillips 66 facility that feeds into
the Glenpool network temporarily halted operations as a safety precaution
without sustaining site damage. Phillips 66 holds an equity ownership stake of
approximately 30% in the Explorer system.
Separately, ONEOK's Scott City terminal reported an outage affecting X grade
and #2 diesel supplies. It was not clear if the outage was related to the
Glenpool explosion.
The domestic supply tightness reflects broader global refined product
pressures, where gasoline, diesel, and jet fuel compete for limited processing
capacity. Regional spot market vulnerability heading into the harvest season
has been amplified by a worldwide scramble for shrinking distillate supply amid
disruptions across Europe and the Middle East.
NYMEX ULSD Crack Hits All-Time High on Supply Tightness
The NYMEX-ULSD crack spread surged to an all-time high Tuesday (8/18),
settling at $102.23 bbl as tight global diesel supplies; strong seasonal
consumption and geopolitical disruptions continued to support refining margins.
The crack, which measures the price difference between a barrel of NYMEX
ULSD and West Texas Intermediate crude futures, surpassed the $100 bbl mark
Tuesday morning well above the $42.01 bbl reported on February 27, the last
trading session before the start of the U.S.-Israeli war with Iran. The spread
also surpassed the previous record of $86.82 bbl reached in October 2022
following Europe's decision to ban Russian refined product imports.
The front-month NYMEX ULSD futures contract settled Tuesday at $4.4371
gallon, the highest settlement on record. As trading volume rolled to a new
month, October became the most actively traded ULSD contract on the day, with
the October-November spread widening to 3.16cts gallon, the strongest
backwardation registered this year, according to DTN data.
The ULSD forward curve remains deeply backwardated, signaling strong demand
for prompt barrels. September ULSD continued to trade at a premium to October
as the market rolled into the next contract month.
Global diesel availability has tightened as disruptions in the Middle East
collide with continued Ukrainian attacks on Russian refining infrastructure.
Recent domestic fuel shortages and intermittent refinery disruption in Russia
have also contributed to the government's decision to restrict fuel exports.
Meanwhile, Houthi attacks on Saudi energy infrastructure and continued
uncertainty surrounding tanker traffic through key Middle Eastern waterways
have added further risk to refined product flows.
Strong overseas buying for U.S. diesel is also pulling barrels out of the
domestic market. U.S. distillate fuel oil exports averaged 1.655 million bpd in
May, the highest monthly rate since July 2017, when shipments averaged 1.750
million bpd, according to the latest monthly data from the U.S. Energy
Information Administration.
The combination of elevated exports, seasonal consumption and constrained
overseas refinery output has intensified competition for U.S. distillate
barrels, keeping NYMEX ULSD prices and margins at historically elevated levels.
Phillips 66 Borger Refinery Exceeds Opacity Limit
Phillips 66 reported an emission event at the Area B at its 149,000 bpd
Borger refinery in Texas exceeded permitted levels, according to a filing with
the Texas Commission on Environmental Quality.
The event occurred between 2:05 p.m. CT Monday (8/17) and approximately 2:40
a.m. CT Tuesday (8/18), according to the initial filing released Tuesday.
The Area B of the Borger refinery includes the Fluid Catalytic Cracking
unites and Hydrofluoric Acid Alkylation units, which convert heavy gas oils and
intermediate hydrocarbons into high-octane gasoline blending components and
cracked gas streams.
Opacity at the refinery's U40 facility reached an estimated 100%, exceeding
the 35% limit listed in the filing.
Phillips 66 said operations personnel took steps to minimize emissions and
an investigation will be conducted to determine the cause of the incident.
The Borger refinery primarily processes medium and heavy sour crude oil to
produce gasoline, diesel and jet fuel.
DTN reached out to Phillips 66 for additional details but did not get an
immediate response.
Flint Hills Reports Flare at Corpus Christi FCC Area
Flint Hills Resources reported Tuesday (8/18) a refinery flare event at the
FCC process area of its 269,500 bpd Corpus Christi West Refinery, according to
a filing with the Texas Commission on Environmental Quality. The event occurred
between 1:28 p.m. and 11:25 p.m. CT Monday (8/17), with emissions vented
through the First Stage Flare.
Estimated emissions included approximately 872 pounds of carbon monoxide,
775 pounds of sulfur dioxide, 329 pounds of benzene, 169 pounds of nitrogen
oxides and 80 pounds of unspecified volatile organic compounds. The reported
benzene and sulfur dioxide quantities exceeded their respective reportable
limits listed in the filing.
Flint Hills said personnel initiated measures to assess and minimize
emissions following the incident.
The cause of the event remains under investigation, the filing stated.
The refinery primarily produces jet fuel, diesel and gasoline.
DTN reached out to Flint Hills Resources for additional details but did not
get an immediate response.
Fire at Glenpool Pipeline Tank Farm Extinguished
Firefighters put out on Tuesday (8/18) a blaze that broke out the previous
day at the Explorer Pipeline tank farm in Glenpool, Oklahoma that ships
gasoline, diesel and jet fuel from the Gulf Coast through to the Midwest and
Chicago area, media reports said.
Emergency response teams used specialized foam suppressants overnight to
control the fire, preventing reignition across the smoldering infrastructure,
the reports added.
No injuries were cited. Local authorities also lifted a shelter-in-place
order and surrounding precautionary evacuations after air monitoring services
reported no ongoing public health hazards from smoke plumes.
During the blaze, a neighboring Phillips 66 facility, which feeds directly
into the Glenpool system, also halted operations as a precaution. Phillips 66
reported no structural damage to its site or impact from the fire.
The operational collaboration with Explorer aside, Phillips 66 holds roughly
a 30% stake in the 1,830-mile refined products pipeline system.
EIA: U.S. Retail Diesel Up 19.7cts on Wk, Near 3-Mth High
U.S. pump prices for diesel surged 19.7cts this week to reach a near
three-month high of $5.454 gallon, Energy Information Administration (EIA) data
showed Tuesday (8/18).
The national average for diesel is now at its highest since the week ended
May 25, when it stood at $5.523 gallon, historical EIA data showed.
The current average is also $1.741 above year-ago levels, reversing the
previous week's decline.
The Midwest region posted the largest diesel price increase In the latest
week to August 17, jumping 25.4cts to $5.435 gallon. Year-on-year, it rose
$1.733.
The Gulf Coast registered the second-largest gain, climbing 19.3cts to
settle at $5.237 gallon.
Prices across California and the broader West Coast region rose 16.7cts and
17cts to $6.785 gallon and $6.203 gallon, respectively.
The New England subregion recorded the smallest weekly increase, edging up
just 3.1cts to $5.545 gallon.
EIA: U.S. Retail Gasoline Up 4.3cts to 9-Week High
U.S. pump prices for regular gasoline rose 4.3cts to $4.049 gallon during
the week ended August 17, the highest level since the week ended June 15, when
prices averaged $4.052 gallon, Energy Information Administration data showed
Tuesday (8/18). The national average stands 92.4cts above levels seen during
the previous year, with the latest increase snapping two consecutive weekly
declines.
Gulf Coast gasoline prices rose 7.9cts to $3.622 gallon, standing 87.7cts
above levels seen during the previous year. The Rocky Mountain region posted
the largest weekly increase nationwide, rising 16.4cts to $4.285 gallon, while
Midwest gasoline registered the second-largest gain, increasing 12.2cts to
$3.938 gallon.
In contrast, New England recorded the largest weekly decline, falling 2.9cts
to $3.946 gallon, followed by the Central Atlantic, where prices dropped 2.2cts
to $4.038 gallon.
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