The EIA’s Weekly Petroleum Status Report was released yesterday. There was a noted draw of 1.7 million bbls on crude inventories. The report also noted that refinery utilization remained high at 96.1%. The EIA stated that for refined products, gasoline drew 1.3 million bbls and distillate rose by 3 million bbls.
In the Chicago cash market, bulk gasoline and distillate prices have remained elevated due to the fact that BP’s Whiting refinery has shut its biggest crude distillation unit. On Wednesday, cash premiums of CBOB and RBOB gasoline in Chicago were hovering at their highest in around a decade, rivaling Los Angeles. There have also been noted problems at Philadelphia Energy Solutions’ refinery in Philadelphia and Phillips 66’s Bayway refinery in New Jersey. PBF Energy Inc.'s Delaware City refinery reported emissions issues for the third time this month which also may lead to some time offline. However, those have not yet materially affected New York Harbor cash markets.
With the loss of the refining capacity at BP’s Whiting refinery, crude inventory levels in Cushing are becoming an increasing concern as the refineries return to service could reach a month. According to Thompson Reuters, Whiting's crude unit can process 240,000 barrels per day. If that entire volume is diverted to Cushing, it would take just 58 days to fill, which is a month earlier than expected. Cushing, Oklahoma is the major storage hub for all Midwest crude waiting to be refined and the home of the WTI futures contract delivery point. As the chart below indicates, crude inventories are already at high levels, despite refining runs over 95%. If refineries continue to remain offline we could see maximum tank levels in the next few months which will pressure WTI prices further.