MARKETWIRE ALERTS

MARKETWIRE ALERTS 

* MarketWire is closed for the Christmas holiday, resuming market coverage and news updates on Friday (12/26).

MarketWire Afternoon News for December 24th:

Updated at 5:00 PM ET 

HEADLINES:

— Midwest 2025 Distillate Basis Hit by Whiting Refinery Outage

— FMCSA Extends Northeast Truck Hours Amid Winter Emergency

— Analysis: Waning U.S. Refining Capacity to Boost Margins

NEWS:
 

Midwest 2025 Distillate Basis Hit by Whiting Refinery Outage

Midwest distillate prices in 2025 were driven less by seasonal demand shifts and more by unexpected refinery outages, particularly BP’s Whiting facility, that triggered sharp price spikes.

Jet fuel emerged as the most reactive distillate product in Chicago, the largest market in the Midwest, as basis averaged a 4.2cts discount to ULSD futures in 2025. This was higher than the 3.6cts discount reported in the same period last year. Jet fuel basis outpaced the ultra-low sulfur diesel (ULSD) average of 2.8cts, compared with 1.8cts recorded during the same time of 2024.

Operational issues at BP’s 435,000 bpd Whiting, Indiana, refinery played a central role in shaping that outcome. The refinery experienced multiple unplanned outages tied to power disruptions and unit-level operational problems. This included one of the most prolonged outage of the year during the third week of June, which extended for more than a week, reducing distillate output and extending restart timelines. The disruptions tightened local supply and amplified price responses in the Chicago market.

Refinery utilization in PADD 2 averaged about 89% in 2025, compared with an average near 96% in 2024, according to the U.S. Energy Information Administration (EIA). The lower refining capacity reflected periods of constrained output and slower restarts. Whiting represents roughly 20% of total refinery capacity in the region, magnifying the impact of operational disruptions on regional balances.

The prolonged nature of Whiting’s outages also pulled in Group 3 distillate markets, which typically respond with a delay to Midwest refinery disruptions. In the first days of the outage, the Chicago–Group 3 ULSD spread reached about 1.50cts, but as the supply tightness extended beyond three days, the spread narrowed to roughly 0.25cts, reflecting tighter replacement economics and increased incentive to move barrels eastward. That shift signaled the disruption was no longer confined to Chicago but had begun to influence broader regional balances.

Inventory dynamics reinforced that response. EIA data show Midwest distillate inventories in 2025 remained relatively lean compared with the same period last year, reducing the region’s ability to absorb supply shocks. Net distillate receipts into PADD 2 from other regions totaled about 17 million bbl from January through September 2025, compared with roughly 13.1 million bbl a year earlier, highlighting continued reliance on inter-PADD flows, particularly from PADD 3. Those inflows helped offset refinery disruptions but were constrained by pipeline scheduling and line space.

Midwest distillate inventories remained below levels from a year earlier, with PADD 2 stocks near 26.9 million bbl, compared with about 28.3 million bbl during the same period last year. The thinner inventory cushion has kept ULSD basis supported, while jet fuel differentials remain more reactive, with jet expected to retain relative strength and ULSD prices firm but sensitive to refinery reliability.

FMCSA Extends Northeast Truck Hours Amid Winter Emergency

The Federal Motor Carrier Safety Administration (FMCSA) on Wednesday (12/24) extended an emergency declaration for nine Northeast states that suspends the limits on a truck driver’s hours to facilitate the movement of critical heating fuels.

Originally issued on December 12 for four states, the amended order now covers Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and West Virginia, the FMCSA said.

The waiver, active through January 15, allows truckers to exceed daily and weekly driving limits when transporting propane, natural gas, and heating oil, the agency said.

The extension responds to a dual-threat to regional energy security – persistent severe winter weather and a major power outage at the Marcus Hook Industrial Complex in Pennsylvania. The outage at the Energy Transfer-operated hub has severely disrupted propane loading, resulting in extreme truck backups at secondary distribution terminals across the region.

The FMCSA noted the move is essential to mitigate an “immediate risk to public health” as mid-December inventories remain under pressure from restricted terminal throughput.

Analysis: Waning U.S. Refining Capacity to Boost Margins

A looming wave of U.S. refinery shutdowns is expected to provide a floor for refining margins, offsetting a global trend where falling crude costs have struggled to keep pace with rising refined product output.

Refining margins soared to multi-year highs in the third quarter as global refinery outages jumped to more than 7 million bpd in September and over 8 million bpd in October.

Refinery runs were down 2.9 million bpd year-on-year in October, even as rallying diesel prices propelled crack spreads to their highest since March 2024.

The current 3:2:1 crack spread versus WTI, while down from its mid-November peak, is still 50% higher than at the same time last year, according to International Energy Agency data.

Chevron’s refining output has been significantly impacted this year by major incidents at its California facilities, most notably an explosion and fire at the 269,000-bpd El Segundo refinery in the Los Angeles County in October that reduced overall plant output by an estimated 15% to 25% for several weeks.

Additionally, a series of unit shutdowns at Chevron’s 245,000-bpd Richmond refinery in the San Francisco Bay in February and July contributed to California fuel imports hitting a four-year high to offset the supply crunch.

Chevron aside, Phillips 66 has already processed the last crude oil barrel at its 139,000-bpd capacity Wilmington refinery in Los Angeles ahead of the planned closure by year-end.

The West Coast is set to lose yet another regional fuel supply source by April 2026 with the closure of Valero’s 145,000-bpd capacity plant in Benicia.

The Phillips 66 and Valero unit closures together account for about 17% of California’s refining capacity and 11% of refining capacity in the PADD 5 region.

This will put additional strain on the West Coast’s gasoline supply. The region largely relies on its own production given the limited access to other PADDs and the lack of transportation infrastructure. The supply gap will likely have to be filled with more expensive imports from Asia.

West Coast gasoline blending component imports have already more than doubled since Marathon converted in 2020 its 48,000-bpd Martinez refinery into a plant that processes renewable versions of diesel, naphtha and propane.

PADD 5 imports of finished gasoline peaked at a four-year high 59,000 bpd in June, a month after the region imported blending components at the fastest pace since 2019, according to U.S. Energy Information Administration data.

Gasoline prices on the West Coast, already higher than the national average, are likely to rise next year, in contrast to retail gasoline prices in the rest of the country. The EIA in its December Short-Term Energy Outlook forecast a national average retail price of $3 gallon in 2026, compared with $3.11 gallon this year, marking a 3.5% decrease. In PADD 5, however, the average gasoline retail price is expected to rise 5cts to $4.16 gallon in 2026.