07 January 2014 22:28 [Source: ICIS news]
HOUSTON (ICIS)--Gasoline spot prices in the Midwest region spiked on Tuesday as freezing temperatures caused refinery upsets, and accordingly, increased refinery buying in the region.
Conventional gasoline in the Group 3 market, which covers the area north of Tulsa, Oklahoma, to Minnesota and North Dakota, was assessed 5.50 cents/gal stronger on Tuesday at a discount of 17.25 cents/gal under reformulated blendstock for oxygen blending (RBOB) gasoline futures on the NYMEX.
During morning trading, this differential even reached a discount of 15.00 cents/gal under futures, according to one trader.
Coupled with the more than 3.00 cent/gal settlement gain in RBOB gasoline futures on the NYMEX, Group 3 conventional gasoline spot prices were assessed on Tuesday at $2.5050-2.5075/gal, compared with the previous day’s assessment of $2.4175-2.4200/gal.
Refinery outages this week in the region included Marathon’s Detroit refinery in Michigan, BP’s Toledo refinery in Ohio and Shell’s Sarnia refinery in Ontario, which supplies that region.
In the Midwest region, there are few refineries, which can cause volatile trading if just one buyer or seller is present in the market.
“While these issues are temporary, shut downs or process upsets can have a very swift impact on retail gasoline prices, and motorists in these areas may see short-term price adjustments as a result of the temporary loss of some gasoline production,” said Patrick DeHaan, senior petroleum analyst with GasBuddy.com, a website that offers an online method for visitors to post and view recent retail gasoline prices.
A time frame for start-up at these refineries was not clear, but the issues may persist until after the weather event has passed, which could lead to an even larger increase in regional spot prices.
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