MARKETWIRE ALERTS
Barani Krishnan
DTN Refined Fuels Market Reporter
MARKETWIRE ALERTS
MarketWire Afternoon News Sept 10:
Updated at 5:00 PM ET
HEADLINES:
-- Group 3 ULSD Surges to Trade Nearer to Rest of Midwest
-- Analysis: U.S. Crude Output Sets Record Amid Price Rally
-- EIA: PADD 5 Gasoline Stocks Drop for Fourth Straight Week
-- EIA: PADD 2 Distillates, Gasoline Retreat From Recent Peak
-- EIA: SPR Stocks Fall to Lowest in 44 Years
-- EIA: PADD 3 Jet Fuel Stocks Rebound 1.3M bbl
-- EIA: PADD 2 Distillates, Gasoline Retreat From Recent Peak
-- EIA: PADD 1 Distillate Stocks Rebound From All-Time Low
-- EIA: US NatGas Storage Reports 40 Bcf Weekly Injection
-- EIA: U.S. Ethanol Demand Edges Lower, Still Up 3.2% on Yr
-- EIA: Propane/Propylene Stocks Rebound, Up 13.1% on Yr
-- U.S. Rack ULSD Tops $5; Gasoline Falls 5.71cts
-- Enbridge Buys Tallgrass Energy Crude Oil Segment for $2.55B
-- OPEC: Iraqi Oil Output Surged, Saudi Slumped in August
-- Valero McKee Sets Five-Day Refinery Maintenance
NEWS
Group 3 ULSD Surges to Trade Nearer to Rest of Midwest
Group 3 ultra-low sulfur diesel (ULSD) spot basis surged Thursday (9/10) to
align more closely with the rest of the Midwest, after being in steep contrast
for two prior days with other regional hubs due to price dislocations caused by
rallying distillate futures.
Group 3 ULSD basis gained 45cts on the day to stand at a discount of 5cts
gallon to the October NYMEX ULSD contract. The upward surge brought the basis
back into closer territory with major regional pipeline hubs after fell 52cts
drop on Wednesday (9/9) and a 35cts increase on Tuesday (9/8).
Across major regional pipeline networks, physical basis adjustments remained
under modest downward pressure. Chicago ULSD basis weakened by 3cts on the day
to trade at a 5.5cts gallon discount to October futures.
In eastern distribution channels, Buckeye Complex and Wolverine ULSD basis
both dropped 2cts to settle at a 3cts gallon discount to the October NYMEX
contract.
The physical cash market alignment developed as benchmark futures continued
their upward rally. The October NYMEX ULSD futures contract climbed $0.2565, or
5.34%, on the day to settle at $5.0575 gallon.
Latest Energy Information Administration (EIA) data showed PADD 2 distillate
fuel oil inventories drew by 300,000 bbl to 28.5 million bbl during the week
ended September 4, pulling stocks off their recent seven-week peak.
Analysis: U.S. Crude Output Sets Record Amid Price Rally
Crude oil production in the United States last week soared to the highest on
record, U.S. Energy Information Administration data released Thursday (9/10)
showed. Prolonged periods of high crude prices sparked by the now six-month
long Middle East supply shortage have disrupted a multi-year-long trend of
fewer but more efficient oil rigs, with production from new rigs propelling
weekly crude oil output to an unprecedented 13.95 million bpd in the week
ending September 4.
This trend was set to continue before the start of the U.S.-Israeli war on
Iran. Prior to the escalation, production and exploration firms polled by the
Federal Reserve Bank of Dallas expected an average crude oil price in a range
high enough to cover expenses for existing wells, but below the $62-$70 bbl
threshold required to profitably drill new wells.
This changed once it became evident that the Hormuz crisis would not be
short-lived. The number of active oil rigs has been on a steady increase since
the end of May, and, given the typical three-to-six-month delay between
investment decision and extraction of the first barrel, we may yet see more
rigs come online over the coming months.
U.S. crude production has a history of surprising to the upside, as
efficiency gains have over the years continued to outweigh the decline in the
number of operations. Now that both the tapping of drilled but uncompleted
wells and the drilling of new ones has over the past few months looked to be
highly profitable, U.S. oil output is likely to soon breach the 14-million bpd
mark and stay far above it throughout this year and the next.
The EIA in its latest Short-Term Energy Outlook published Wednesday (9/10)
forecast crude oil production to average just over 14 million bpd next quarter
and steadily increasing throughout 2027 to reach 14.39 million bpd by the end
of next year. The Permian is set to be the main source of the additional
barrels. The region, which produces a little less than half of U.S. crude oil,
is expected to account for 79%, or 340,000 bpd of the 430,000-bpd forecasted
year-on-year increase.
EIA: PADD 5 Gasoline Stocks Drop for Fourth Straight Week
U.S. West Coast (PADD 2) gasoline inventories dropped for the fourth
consecutive week, along with jet fuel, while distillate inventories rose during
the week ended September 4, the U.S. Energy Information Administration (EIA)
reported Thursday (9/10).
Motor gasoline stocks in the PADD 5 region fell by 100,000 bbl to 27.1
million bbl during the referenced week, the EIA's Weekly Petroleum Status
Report showed. Year-over-year, the same product inventory was below the 30.4
million bbl reported during the same period last year.
Motor gasoline imports amounted to 120,000 bpd last week, nearly six times
higher than the 22,000 bpd reported the prior week. This doubled also the
volume imported in the same week of last year, when it recorded 67,000 bpd.
Regional distillate fuel stockpiles rose by 200,000 bbl to 10.1 million bbl
from the prior week and were below levels from the same week of a year earlier,
when distillates were at 12.1 million bbl. Distillate imports in PADD 5 fell to
21,000 bpd from 42,000 bpd on the week, and down from 50,000 bpd reported
year-over-year.
Jet fuel stocks in PADD 5 dropped by 200,000 bbl to 11.2 million bbl on the
week and were well below the previous year's level of 11.3 million bbl. Jet
fuel imports in PADD 5 rose to 75,000 bpd from 66,000 bpd on a weekly basis.
That was below the 120,000 bpd imported in the same period of last year.
Crude oil inventories in PADD 5 fell by 2.7 million bbl to 45 million bbl
during the reference week, below the 45.9 million bbl reported for the same
week of the prior year. Crude imports in PADD 5 dipped to 1.024 million bpd
from 1.144 million bpd the prior week. On a yearly basis, crude imports were
below 1.62 million bpd, the EIA data showed.
National refinery utilization rose to 93.2% from 92.8% the previous week.
EIA: PADD 2 Distillates, Gasoline Retreat From Recent Peak
Midwest oil inventories fell across the board last week, pulling distillate
and gasoline stocks off their recent multi-week highs as refinery utilization
eased, the Energy Information Administration (EIA) reported Thursday (9/10).
Motor gasoline inventories in the PADD 2 region fell by 200,000 bbl during
the week ended September 4 to stand at 43.2 million bbl, according to the EIA's
Weekly Petroleum Status Report. Year-on-year, regional gasoline stocks fell by
2.4 million bbl from the 45.6 million bbl recorded during the corresponding
week of 2025.
Weekly imports of gasoline into the Midwest dropped by 5,000 bpd on the week
to average 1,000 bpd during the current reporting period. This inbound volume
was down by 13,000 bpd from the year-ago level of 14,000 bpd recorded during
the same week last year.
PADD 2 distillate fuel oil inventories decreased by 300,000 bbl on the week
to 28.5 million bbl, retreating from the prior week's seven-week high. The
latest weekly draw placed regional inventories of the product at 2.1 million
bbl lower than the 30.6 million bbl logged during the corresponding week last
year.
Distillate imports into the Midwest averaged 3,000 bpd, down 2,000 bpd on
the week and down by 20,000 bpd from the year-ago volume of 23,000 bpd.
Jet fuel stocks fell by 400,000 bbl from the prior week to 7.8 million bbl,
though they remained 200,000 bbl above the previous year's level of 7.6 million
bbl. Weekly jet fuel imports into the region remained flat at zero bpd,
matching both week-ago and year-ago levels.
Crude oil inventories decreased by 400,000 bbl on the week to 100.1 million
bbl, which is 4.0 million bbl lower than last year's level of 104.1 million bbl.
PADD 2 crude imports fell by 330,000 bpd on the week to average 2,670,000
bpd, according to latest EIA data. This inbound crude oil volume was 226,000
bpd lower than the 2,896,000 bpd reported by the agency during the
corresponding week last year.
Refiner use of crude in the Midwest slid to 4.349 million bpd last week,
versus 4.425 million the week prior and 4.177 million a year ago. The regional
utilization rate slipped to 101.6% versus the prior week's 103.5% but remained
well above the year-ago level of 98.3%.
EIA: SPR Stocks Fall to Lowest in 44 Years
U.S. Strategic Petroleum Reserve crude oil inventories fell to their lowest
level in nearly 44 years during the week ended September 4, extending declines
tied to an emergency crude oil exchange initiated earlier this year, according
to Energy Information Administration data released Thursday (9/10).
SPR inventories fell by 1.2 million bbl to 285.4 million bbl during the
reference week from 286.6 million bbl the previous week. The latest inventory
level was the lowest since the week ended November 5, 1982, when the reserve
held 284.9 million bbl.
SPR inventories were 119.9 million bbl, or 29.6%, below the 405.2 million
bbl reported during the same week last year, EIA data showed.
The Department of Energy began delivering crude oil from the SPR on March 20
as part of an emergency exchange under which the United States committed 172
million bbl toward a coordinated 400 million bbl release by International
Energy Agency member countries aimed at addressing global oil supply
disruptions. Companies receiving SPR crude under the exchange are required to
return the borrowed oil at a later date, along with additional barrels as
compensation to the government.
EIA: PADD 3 Jet Fuel Stocks Rebound 1.3M bbl
U.S. Gulf Coast (PADD 3) jet fuel inventories rebounded from a three-month
low during the week ended September 4, while gasoline and crude oil stocks
increased and distillate fuel inventories edged down as refinery utilization
remained high, according to the U.S. Energy Information Administration's Weekly
Petroleum Status Report released Thursday (9/10).
Jet fuel inventories increased by 1.3 million bbl to 15.6 million bbl during
the reference week, rebounding from the previous week's three-month low of 14.3
million bbl. Inventories were 2.4 million bbl above the 13.2 million bbl
reported during the same week last year. The Gulf Coast reported no jet fuel
imports during the reporting week.
Motor gasoline inventories in the PADD 3 region increased by 1.1 million bbl
to 77.3 million bbl during the reference week, reversing the previous week's 1
million bbl decline. Inventories remained 4.6 million bbl below the 81.9
million bbl reported during the same week last year. Gasoline imports into the
Gulf Coast averaged 8,000 bpd, down from 36,000 bpd the previous week and
67,000 bpd during the comparable week of 2025.
Distillate fuel oil inventories, the feedstock for diesel, fell by 200,000
bbl to 42.5 million bbl during the profiled week after increasing by 3.1
million bbl the previous week. Inventories remained 1.7 million bbl below the
44.2 million bbl reported during the same week last year. As a net exporter of
distillate fuel, PADD 3 reported no distillate imports during the reporting
week.
Crude oil inventories in PADD 3 increased by 2.4 million bbl to 247.5
million bbl during the reference week, reversing the previous week's 6.3
million bbl decline. Inventories were 2.6 million bbl above the 244.9 million
bbl reported during the same week last year. Crude oil imports into the Gulf
Coast averaged 1.993 million bpd, up from 1.721 million bpd the previous week
and 779,000 bpd during the comparable week of 2025.
Refinery utilization on the Gulf Coast increased to 98.3% of operable
capacity from 97.7% the previous week, while crude oil inputs into refineries
averaged 9.730 million bpd, up from 9.600 million bpd the week before, EIA data
showed.
EIA: PADD 2 Distillates, Gasoline Retreat From Recent Peak
Midwest oil inventories fell across the board last week, pulling distillate
and gasoline stocks off their recent multi-week highs as refinery utilization
eased, the Energy Information Administration (EIA) reported Thursday (9/10).
Motor gasoline inventories in the PADD 2 region fell by 200,000 bbl during
the week ended September 4 to stand at 43.2 million bbl, according to the EIA's
Weekly Petroleum Status Report. Year-on-year, regional gasoline stocks fell by
2.4 million bbl from the 45.6 million bbl recorded during the corresponding
week of 2025.
Weekly imports of gasoline into the Midwest dropped by 5,000 bpd on the week
to average 1,000 bpd during the current reporting period. This inbound volume
was down by 13,000 bpd from the year-ago level of 14,000 bpd recorded during
the same week last year.
PADD 2 distillate fuel oil inventories decreased by 300,000 bbl on the week
to 28.5 million bbl, retreating from the prior week's seven-week high. The
latest weekly draw placed regional inventories of the product at 2.1 million
bbl lower than the 30.6 million bbl logged during the corresponding week last
year.
Distillate imports into the Midwest averaged 3,000 bpd, down 2,000 bpd on
the week and down by 20,000 bpd from the year-ago volume of 23,000 bpd.
Jet fuel stocks fell by 400,000 bbl from the prior week to 7.8 million bbl,
though they remained 200,000 bbl above the previous year's level of 7.6 million
bbl. Weekly jet fuel imports into the region remained flat at zero bpd,
matching both week-ago and year-ago levels.
Crude oil inventories decreased by 400,000 bbl on the week to 100.1 million
bbl, which is 4.0 million bbl lower than last year's level of 104.1 million bbl.
PADD 2 crude imports fell by 330,000 bpd on the week to average 2,670,000
bpd, according to latest EIA data. This inbound crude oil volume was 226,000
bpd lower than the 2,896,000 bpd reported by the agency during the
corresponding week last year.
Refiner use of crude in the Midwest slid to 4.349 million bpd last week,
versus 4.425 million the week prior and 4.177 million a year ago. The regional
utilization rate slipped to 101.6% versus the prior week's 103.5% but remained
well above the year-ago level of 98.3%.
EIA: PADD 1 Distillate Stocks Rebound From All-Time Low
U.S. East Coast distillate fuel oil stocks rebounded from all-time record
lows last week, while motor gasoline inventories also rose, the Energy
Information Administration (EIA) reported Wednesday (9/10).
Jet fuel balances fell in the PADD 1 region as refinery utilization slipped
during the week ended September 4, the EIA's Weekly Petroleum Status Report
showed. Crude oil stocks, meanwhile, rose.
Distillate inventories built by 2.4 million bbl to 21.7 million bbl during
the profiled week, recovering from the prior week's historic bottom of 19.3
million bbl. Despite the weekly gain, regional distillate balances remained
down on the year, by 8.6 million bbl compared to the 30.3 million bbl recorded
in the same week of 2025. Distillate imports into the East Coast surged to
149,000 bpd from 49,000 bpd the previous week, surpassing the 134,000 bpd
brought in during the year-ago period.
Gasoline stocks in PADD 1 rose by 400,000 bbl to 53.0 million bbl during the
reference week, though they remained 2.7 million bbl below the 55.7 million bbl
logged during the same week last year. Gasoline imports into the region
increased to 320,000 bpd from 278,000 bpd the previous week but were below the
503,000 bpd reported during the comparable week of 2025.
Jet fuel inventories decreased by 500,000 bbl during the reference week to
10.7 million bbl, though they stood 400,000 bbl above the 10.3 million bbl
reported a year ago. East Coast jet fuel imports averaged 19,000 bpd, up from
13,000 bpd the previous week and 6,000 bpd imported during the comparable week
of last year.
Crude oil inventories on the East Coast edged down by 100,000 bbl to 8.4
million bbl during the week profiled, while standing 1.2 million bbl above the
7.2 million bbl reported during the same week last year. Crude imports into the
region averaged 707,000 bpd, up from 530,000 bpd the previous week and above
the 555,000 bpd reported during the comparable week of 2025.
Refinery utilization on the East Coast fell by 1.3 percentage points to
85.3% of operable capacity from 86.6% the previous week, even as crude oil
inputs edged up by 1,000 bpd to 789,000 bpd, EIA data showed.
EIA: US NatGas Storage Reports 40 Bcf Weekly Injection
Energy Information Administration data released midmorning Thursday (9/10)
show a 40 billion cubic feet injection into U.S. natural gas storage to 3.254
trillion cubic feet in the week ended September 4. Natural gas in U.S. storage
is 2.4% lower than last year and 4.8% above the five-year average of 3.106 Tcf.
Regionally, EIA reports the East registered a 20 Bcf injection to 773 Bcf,
2.5% more than a year ago and 5.9% higher than the five-year average.
Natural gas in storage in the Midwest increased 18 Bcf week-on-week to 908
Bcf, a 2.5% surplus compared to the same week a year ago and 4.4% higher than
the five-year average.
Mountain region natural gas in storage increased 3 Bcf, down 7% year-on-year to
8.6% above the five-year average.
South Central storage fell 7 Bcf to 1044 Bcf, 8.7% less than in the same
week last year and 2% above the five-year average.
EIA: U.S. Ethanol Demand Edges Lower, Still Up 3.2% on Yr
The Energy Information Administration reported on Thursday (9/10) that
overall ethanol production in the United States averaged 1.099 million bpd in
the week ending September 4, down 11,000 bpd week-on-week and 6,000 bpd, or
0.5% lower than in the same week last year. Four-week average output at 1.102
million bpd was 22,000 bpd above the same four weeks last year.
Midwest ethanol production averaged 1.038 million bpd, down 15,000 bpd
week-on-week and 9,000 bpd, or 0.9% lower than in the same week last year.
Four-week average output at 1.046 million bpd was 20,000 bpd above the same
four weeks last year.
Ethanol blending activity in the U.S. averaged 908,000 bpd, down 32,000 bpd
week-on-week and 28,000 bpd, or 3.2% higher than in the same week last year.
Four-week average blending demand at 924,000 bpd was 11,000 bpd above the same
four weeks last year.
Blender inputs at the East Coast were down 7,000 bpd on the week while
inputs in the Midwest were down 12,000 bpd, down 14,000 bpd on the Gulf Coast
and remained unchanged on the week on the West Coast.
Domestic ethanol inventories ended the week at 25.187 million bbl, up
152,000 bbl week-on-week and 2.35 million bbl, or 10.3% higher than in the same
week last year.
East Coast PADD 1 inventories ended the week at 7.684 million bbl, up 92,000
bbl week-on-week and 982,000 bbl, or 14.7% higher than in the same week last
year.
Midwest PADD 2 inventories ended the week at 9.822 million bbl, up 382,000
bbl week-on-week and 115,000 bbl, or 1.2% higher than in the same week last
year.
Gulf Coast PADD 3 inventories ended the week at 5.172 million bbl, down
77,000 bbl week-on-week and 1.563 million bbl, or 43.3% higher than in the same
week last year.
West Coast PADD 5 inventories ended the week at 2.18 million bbl, down
241,000 bbl week-on-week and 281,000 bbl, or 11.4% lower than in the same week
last year.
EIA: Distillate Stocks Rise 2.1M bbl on Week
U.S. distillate fuel inventories increased for a second consecutive week
during the week ended September 4, while gasoline and jet fuel stocks also
built and commercial crude oil inventories edged down as refinery utilization
remained high, according to Energy Information Administration data released
Thursday (9/10).
Distillate fuel inventories increased by 2.1 million bbl to 106.3 million
bbl during the profiled week, following the previous week's 800,000 bbl build.
Inventories remained 14.4 million bbl, or 11.9%, below the 120.6 million bbl
reported during the same week last year. Distillate imports averaged 185,000
bpd compared with 113,000 bpd the previous week and 217,000 bpd during the
comparable week last year. Distillate exports fell to 1.556 million bpd from
1.735 million bpd the previous week but remained above the 1.394 million bpd
reported during the comparable week of 2025.
Commercial crude oil inventories fell by 400,000 bbl to 424.1 million bbl
during the profiled week and were 600,000 bbl, or 0.1%, below the 424.6 million
bbl reported during the same week last year. Crude oil imports averaged 6.824
million bpd, up by 53,000 bpd from the previous week. Crude oil exports fell to
3.417 million bpd from 4.483 million bpd the previous week but remained above
the 2.745 million bpd reported during the comparable week of 2025.
Total motor gasoline inventories increased by 1.3 million bbl to 206.9
million bbl during the reference week, reversing the previous week's 1.2
million bbl decline. Inventories remained 13.1 million bbl, or 5.9%, below the
220 million bbl reported during the same week last year. Gasoline imports
averaged 464,000 bpd compared with 370,000 bpd the previous week and 681,000
bpd during the comparable week last year. Gasoline exports averaged 872,000 bpd
versus 934,000 bpd the previous week and 993,000 bpd during the comparable week
of 2025.
Jet fuel inventories increased by 200,000 bbl to 46 million bbl during the
reference week and were 2.8 million bbl, or 6.4%, above the 43.3 million bbl
reported during the same week last year. Jet fuel imports averaged 95,000 bpd
compared with 81,000 bpd the previous week and 127,000 bpd during the
comparable week last year. Jet fuel exports averaged 309,000 bpd versus 331,000
bpd the previous week and 191,000 bpd during the comparable week of 2025.
Refinery utilization edged down to 97.8% of operable capacity from 98% the
previous week, while crude oil inputs into refineries increased to 17.586
million bpd from 17.496 million bpd the week before, EIA data showed.
EIA: Propane/Propylene Stocks Rebound, Up 13.1% on Yr
The Energy Information Administration reported on Thursday (9/10) total
domestic propane/propylene stocks of 110.47 million bbl in the week ending
September 4, up 3.059 million bbl week-on-week and 12.836 million bbl, or 13.1%
higher than in the same week last year.
Data show propane/propylene exports last week averaged 1.96 million bpd,
down 193,000 bpd week-on-week and 69,000 bpd, or 3.6%, higher than in the same
week last year.
Implied demand for propane/propylene in the United States averaged 657,000
bpd, down 468,000 bpd week-on-week and 210,000 bpd, or 24.2% lower than in the
same week last year.
EIA reports domestic propane/propylene production averaged 2.953 million
bpd, up 37,000 bpd week-on-week and 93,000 bpd, or 3.3% higher than in the same
week last year.
East Coast PADD 1 inventories ended the week at 8.515 million bbl, up
657,000 bbl week-on-week and 607,000 bbl, or 7.7% higher than in the same week
last year.
Midwest PADD 2 inventories ended the week at 26.562 million bbl, up 386,000
bbl week-on-week and 239,000 bbl, or 0.9% higher than in the same week last
year.
Gulf Coast PADD 3 inventories ended the week at 70.196 million bbl, up 2.014
million bbl week-on-week and 12.022 million bbl, or 20.7% higher than in the
same week last year.
Combined inventories in the Rockies and the West Coast, PADD 4 and 5, ended
the week at 5.196 million bbl, up 1,000 bbl week-on-week and 32,000 bbl, or
0.6% lower than in the same week last year.
U.S. Rack ULSD Tops $5; Gasoline Falls 5.71cts
U.S. wholesale ultra-low sulfur diesel (ULSD) rack prices surged above $5
gallon Thursday (9/10), rising across all five PADDs, as futures of crude hit
their highest since April while those of diesel rallied to new Iran war highs
amid mounting Middle East supply concerns. Gasoline racks, meanwhile, fell
across all regions.
Nationwide ULSD rack prices averaged $5.1556 gallon, up 17.90cts from the
previous day's $4.9767 gallon. The average was 74.98cts, or 17.0%, above the
August average of $4.4058 gallon and $2.5700, or 99.4%, above the $2.5856
gallon average from the previous year, according to DTN data.
Conventional unleaded gasoline rack prices averaged $3.3418 gallon, down
5.71cts from $3.3989 gallon Wednesday. Thursday's average remained 25.60cts, or
8.3%, above August's $3.0858 gallon average and $1.0717, or 47.2%, above the
$2.2701 gallon average from the previous year.
The sharp rise in diesel racks came as crude and product futures extended
their rally Thursday following another round of attacks on oil tankers near the
Strait of Hormuz, adding to concerns that the Middle East supply disruption
could persist longer than previously expected.
WTI climbed above $100 bbl Thursday morning, reaching its highest level
since April, when it peaked above $117. Front-month NYMEX ULSD, meanwhile,
traded above $4.96 gallon, up more than 16cts on the day. New York Harbor
heating oil backwardation widened to about 20cts, reflecting continued strength
in prompt diesel supply.
The futures strength flowed directly into regional ULSD racks. West Coast
values posted the largest increase, rising 22.37cts to $5.8037 gallon, followed
by Gulf Coast prices, which jumped 22.12cts to $4.9991 gallon. Midwest ULSD
increased 20.85cts to $5.1114 gallon, Rocky Mountain values rose 17.82cts to
$5.2416 gallon and East Coast prices advanced 10.08cts to $4.9591 gallon.
Relative to the national ULSD average of $5.1556 gallon, PADD 5 maintained
the widest premium at 64.81cts, followed by PADD 4 at 8.60cts. PADD 1 traded
19.65cts below the national benchmark, PADD 3 held a 15.65cts discount and PADD
2 stood 4.42cts below the U.S. average.
Gasoline racks went in the opposite direction, falling across all five
regions despite a rebound in futures. Midwest gasoline recorded the largest
decline, falling 7.63cts to $3.1205 gallon, while East Coast values dropped
6.24cts to $3.1739 gallon and Gulf Coast gasoline fell 5.71cts to $3.1763
gallon. West Coast prices declined 2.64cts to $4.0875 gallon and Rocky Mountain
values fell 2.62cts to $3.8645 gallon.
RBOB futures were up about 10cts Thursday morning to trade above $3.31
gallon. The front of the gasoline curve remained strongly backwardated at about
17cts, widening roughly 2cts on the day.
Compared with the national gasoline average of $3.3418 gallon, PADD 5
maintained the largest premium at 74.57cts, followed by PADD 4 at 52.27cts.
PADD 2 held the widest discount at 22.13cts, while PADD 1 and PADD 3 traded
16.79cts and 16.55cts below the national average, respectively.
The latest rack moves widened the split between diesel and gasoline markets,
with ULSD replacement costs responding sharply to higher futures and persistent
concerns over global middle-distillate supply. EIA on Wednesday raised its 2026
retail diesel price forecast to $5.07 gallon from $4.85 gallon and expects U.S.
distillate inventories to fall below 100 million bbl in September, remaining
below the five-year average low through 2027.
Enbridge Buys Tallgrass Energy Crude Oil Segment for $2.55B
Enbridge has entered into a definitive agreement to acquire the crude oil
business of wholly-owned subsidiaries of Tallgrass Energy for U.S.$2.55 billion
in cash, subject to customary closing adjustments.
According to a company statement, the acquisition includes a 75% interest in
Pony Express Pipeline, a 1,050-mile system with approximately 460,000 bpd of
capacity connecting Rockies production to Cushing, Oklahoma. The transaction
also includes a 51% interest in the Powder River Gateway system and
approximately 8.4 million barrels of crude storage capacity across nine
terminals. Stanchion Energy, a crude marketing business, is also part of the
deal.
The deal creates a strategic corridor linking the Bakken, Powder River
Basin, and Denver-Julesburg basins through Cushing, complementing Enbridge's
existing Express-Platte system.
The transaction also includes PXP2, a U.S.$0.3 billion expansion project
expected to increase Pony Express capacity to 515,000 bpd by late 2027, adding
to Enbridge's $41 billion secured growth backlog.
The deal, valued at an estimated 10--11x forward EV/EBITDA, is expected to
close later in 2026, pending Federal Trade Commission clearance and other
regulatory approvals.
OPEC: Iraqi Oil Output Surged, Saudi Slumped in August
The Organization of the Petroleum Exporting Countries' (OPEC) monthly oil
market report released Thursday (9/10) showed Iraqi oil production continuing
to recover at a break-neck pace in August, leading overall output from the
group nearly 300,000 bpd higher from July.
Estimates based on OPEC secondary sources pegged Iraqi crude production last
month at 3.38 million bpd, 664,000 bpd higher than in July and 1.42 million bpd
above June levels. This recovery came as more Iraqi oil was able to traverse
the Strait of Hormuz after Tehran granted permissions to Iraqi tankers and a
U.S.-protected shipping corridor along the Omani coast allowed for higher flows.
Saudi Arabia's self-reported production levels, meanwhile, showed a much
steeper monthly decline than the 75,000-bpd dip cited in the report. OPEC's de
facto leader said that crude oil production slumped from 8.14 million bpd in
July to 6.24 million bpd, the lowest since 1990.
Overall, the producer group maintained that the increase in Iraqi output
more than outweighed the combined declines from Saudi Arabia and Iran. This
stood in stark contrast to the U.S. Energy Information Administration's recent
Short-Term Energy Outlook published Wednesday, which estimated that shut-ins of
crude oil output in the Middle East rose to 6.7 million bpd last month from 5
million bpd in July.
The EIA also revised lower fourth quarter OPEC production estimates by 1.6
million bpd, or 6.5%. This came despite the assumption that supply from the
Middle East is set to increase as flows through the Strait of Hormuz gradually
pick up. The forecast was completed on September 3, before the most recent
round of escalation that started last weekend.
Valero McKee Sets Five-Day Refinery Maintenance
Valero Energy's 200,000 bpd McKee refinery in Sunray, Texas, is scheduled to
begin five days of maintenance Thursday (9/10) involving Complex 1 and Complex
3, according to a filing with the Texas Commission on Environmental Quality
(TCEQ).
The maintenance is scheduled to begin at 3:00 p.m. CT Thursday and continue
through 3:00 p.m. Tuesday (9/15). Valero submitted the initial notification on
August 31.
Equipment listed in the filing includes the fluid catalytic cracking unit,
or FCCU, along with the FCCU flare, hydrocracker flare and No. 1 Main Refinery
Flare.
The FCCU is a key gasoline-producing unit that converts heavier refinery
streams into gasoline blendstocks and other lighter products, while
hydrocracking operations are important for producing middle distillates,
including diesel and jet fuel. The filing did not indicate whether production
would be affected during the maintenance.
The refinery expects opacity at the FCCU stack could reach 100% during the
maintenance activity, compared with a permitted limit of 35%, according to the
filing.
Operations and maintenance personnel will follow established procedures to
reduce and minimize emissions during the work.
The McKee refinery primarily produces gasoline, diesel and jet fuel.
DTN reached out to Valero Energy for additional details but did not get an
immediate response.
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