MARKETWIRE ALERTS

MARKETWIRE ALERTS 

MarketWire Afternoon News May 18th:

Updated at 5:00 PM ET 

HEADLINES:

— LA CARBOB Basis Up on Supply Fears

— Cenovus Lima Refinery Reports FCCU Flare Event

— U.S. Renews Russia Oil Sanctions Waiver for 30 Days

— Midwest ULSD Basis Rises as Pipeline Supplies Tighten

— Enterprise Mont Belvieu Complex Reports Propane Emission

— Midwest Basis Could Rise in Pre-Memorial Day Squeeze

— AAA: Record Memorial Day Travel to Top 45 Million

— Phillips 66 OKs Zeus Gas Plant, New Coastal Fractionator

— Phillips 66 Wood River Refinery Reports Flare Event

NEWS:

LA CARBOB Basis Rises 3cts; SF Sees No Trades
Prompt Los Angeles CARBOB regular basis strengthened Monday (5/18), trading at a 30cts premium to NYMEX RBOB futures, on concerns over near-term supplies despite federal data showing back-to-back weekly builds in gasoline stockpiles.

San Francisco CARBOB, meanwhile, saw no confirmed trades on the day, according to West Coast gasoline traders.

Los Angeles CARBOB differentials rose 3cts from Friday’s last confirmed trade that pegged the product at a premium of 27cts gallon then to June NYMEX RBOB.

Motor gasoline inventories in the PADD 5 region increased by 100,000 bbl to 28.3 million bbl during the week ended May 8, after rising the prior week, the Energy Information Administration said. Year-on-year, gasoline stocks in the region were 1.7 million bbl higher.

Despite the consecutive stockpile builds, traders said the market was looking beyond near-term supply to concerns over the Middle East conflict and how that could seize up the market. Long-term refinery capacity constraints in the West Coast were also pushing domestic gasoline premiums higher.  

Cenovus Lima Refinery Reports FCCU Flare Event

Cenovus Energy reported Wednesday (5/14) a two-day flaring event at the fluid catalytic cracking unit (FCCU) of its 183,000 bpd Lima Refinery in Lima, Ohio, according to the Ohio Environmental Protection Agency.

The event began Wednesday (5/13) evening and ended Friday (5/15), the Ohio EPA said in a statement to DTN.

According to information provided by the agency, an issue involving the refinery’s FCCU caused flaring from the air pollution control system.

The refinery initially reported a federally reportable sulfur dioxide release and later notified regulators that the same event also resulted in a federally reportable release of hydrogen sulfide.

Ohio EPA said the refinery is required to submit a more detailed written incident summary in its quarterly report. No additional operational details or mitigation measures were immediately available.

The Lima refinery primarily produces gasoline, diesel, and jet fuel.

DTN reached out to Cenovus for additional details but did not receive an immediate response.

U.S. Renews Russia Oil Sanctions Waiver for 30 Days

The Trump administration has issued another 30-day waiver on Russian oil sanctions to enable nations impacted by the Middle East conflict to import Russian crude already at sea, the U.S. Treasury announced Monday (5/18).

Prior to this, the Treasury issued on two occasions month-long waivers on Russian oil sanctions. The latest order expired on May 16. It has now been reissued for 30 days through June 17, the Treasury’s Office of Foreign Assets Control said in a statement.

The Middle East conflict began end-February with U.S.-Israeli airstrikes on Iran and advanced as Tehran responded with attacks on regional oil infrastructure and a blockade of the Persian Gulf’s Strait of Hormuz, where a fifth of the world’s petroleum supply used to pass.

India was the main beneficiary of the exemptions, with domestic refiners led by Reliance Industries reportedly ordering roughly 30 million barrels of stranded Russian crude since the waivers began in March.

Midwest ULSD Basis Rises as Pipeline Supplies Tighten

Midwest ultra-low sulfur diesel (ULSD) basis values strengthened Monday (5/18) with the regional premium climbing to 40cts gallon over June NYMEX ULSD as traders adjusted to intensifying refinery constraints across the region.

ULSD basis at Chicago, Buckeye Storage Complex and the Wolverine Pipeline rose by 23.5cts gallon from Friday’s (5/15) premium of 16.5cts.

By contrast, Group 3 ULSD basis weakened from the prior session’s Merc level to a 7cts discount to the NYMEX benchmark. Traders attributed the divergence on the basis to Group 3 being in a relatively comfortable supply situation compared with the tighter markets along the other three pipeline systems. 

The tightening Midwest cash market for ULSD follows federal data showing PADD 2 distillate inventories dropping by 700,000 bbl to a lean 24.2 million bbl during the week ended May 8.

Regional processing flexibility also remains heavily restricted by an ongoing labor lockout at BP’s 440,000 bpd Whiting refinery, alongside prolonged maintenance turnarounds at Phillips 66’s 365,000 bpd Wood River refinery and Marathon Petroleum’s 235,000 Robinson facility.

Enterprise Mont Belvieu Complex Reports Propane Emission

Enterprise reported a 24-hour emissions event at its 1.2 million bpd Enterprise East facility in Mont Belvieu, Texas, according to an initial incident report filed with the Texas Commission on Environmental Quality (TCEQ).

The emission event began on May 15 at 4:15 p.m. concluding on May 16 at 4:15 p.m. The event originated in the Splitter III Unit 1 process area, specifically at emission point F-3.01, identified as Splitter III Process Fugitives.

The cause was identified as a pinhole leak discovered on piping connected to a level gauge. Approximately 50 pounds of propane and 1,100 pounds of propylene were released, according to the filing.

“Enterprise utilized good engineering practices and plans during this event. A repair clamp was installed on May 16,” the company stated.

The case remains open.

Midwest Basis Could Rise in Pre-Memorial Day Squeeze

Midwest refined product differentials could face upward pressure this week as blenders and distributors aggressively pull fuel volumes to meet demand anticipated for the May 25 Memorial Day holiday travel window.

The forecast spike in road trips will collide with structural tightness across the U.S. midcontinent, where an unusually heavy refinery problem stack denies the market of supply flexibility. The AAA projects that a record 45 million people in the U.S. will go behind the wheel for the holiday. Over 1.3 million of that will be Michigan travelers, the data shows, underscoring the pull on regional supply despite Midwest gasoline averaging above $4.40 gallon.

A multi-layered refining crunch has gripped the PADD 2 region, anchored by an ongoing United Steelworkers lockout at BP’s 440,000 bpd Whiting refinery that continues to limit the facility’s production flexibility. Simultaneously, prolonged spring turnarounds at Phillips 66’s 356,000 bpd Wood River plant and Marathon Petroleum’s 253,000 bpd Robinson facility have heavily curtailed regional processing capacity.

The supply deficit has triggered extreme price gyrations, with traders noting that refiners routinely hoard barrels on supply squeeze fears before abruptly releasing them to the spot market. That, in turn, has led to massive daily fluctuations in Midwest fuel differentials, illustrated by the May 12 session, where prompt Chicago ULSD basis spiked to a premium of 97.5cts before losing 85cts from that later in the day.

Similar volatility is shaking the gasoline complex, where Chicago, Wolverine, and Buckeye differentials fell up to 21.5cts on May 13 despite bullish inventory drawdowns.

Inventory data from the U.S. Energy Information Administration highlights the underlying tension, with PADD 2 motor gasoline stocks falling for a fourth consecutive week to 45.6 million bbl during the week ended May 8.

This drop leaves regional gasoline inventories at their lowest level since late November, while regional distillate stockpiles sit at a lean 24.2 million bbl.

With wholesale ULSD and jet fuel basis highly exposed to peak spring agricultural and commercial trucking demand, physical cash markets look poised for further violent swings.

AAA: Record Memorial Day Travel to Top 45 Million

Some 45 million people in the U.S. will travel at least 50 miles from home for this year’s Memorial Day, according to AAA forecasts which set a new record for the holiday weekend.

The vast majority will drive, the AAA said in the forecast issued on May 11, predicting that 39.1 million people will get behind the wheel, the highest ever for a Memorial Day celebration. The AAA typically has a five-day tracking period for the holiday, with this year’s window being May 21-25. Last year, approximately 44.8 million people traveled for Memorial Day, according to the AAA.

This year’s surge will come amid U.S. gasoline trending at an average of $4.50 gallon – well above the 2025 Memorial Day average of $3.17 gallon.

“Travel demand remains strong, and despite higher fuel prices, many people are prioritizing leisure travel during holiday breaks,” the AAA noted.

Road travelers aside, the AAA expects a further 3.66 million to take domestic flights, representing 8% of the travel share. Roundtrip domestic airfares averaged $800, down 6% compared to last year, as most travelers booked flights before recent jet fuel spikes hit ticket prices, the AAA’s research shows.

Travel by other modes, including bus, train, and cruise, is projected to rise 5% on the year to 2.2 million passengers. Growth in this sector is driven heavily by the kickoff of the highly popular Alaska cruise season.

Phillips 66 OKs Zeus Gas Plant, New Coastal Fractionator

Phillips 66 is moving forward with the Zeus Gas Plant and a third Coastal Bend Fractionator, as the company looks to strengthen its end-to-end natural gas and NGL value chain from the wellhead to market.

At the heart of the upstream expansion is Zeus, a 300 MMcf/d processing plant in the Permian Basin, paired with the newly designated Midland Express Pipeline, or MEX, a roughly 45-mile, 20-inch diameter line designed to carry up to 230 MMcf/d of wellhead gas, the company said in a statement late Friday (5/8).

The MEX Pipeline will tie together Phillips 66’s existing Permian gathering infrastructure and is built with future bi-directional flow capability across multiple plants.

On the Gulf Coast, the company is developing what was formerly called the Corpus Christi Fractionator, or BTT2, now rebranded as the third Coastal Bend Fractionator. The 100 million bpd facility in Robstown, Texas will also incorporate expanded NGL purity pipelines and new water treatment infrastructure. Both projects are slated for completion in 2028.

Don Baldridge, Executive Vice President of Midstream at Phillips 66, said the investments are designed to boost system connectivity and unlock additional value across the company’s midstream network.

The projects fit within Phillips 66’s $2.0–$2.5 billion capital budget, as the company continues working toward a $17 billion debt target by end of 2027 and a commitment to return over half of net operating cash flow to shareholders.

Phillips 66 Wood River Refinery Reports Flare Event

Phillips 66 reported Friday (5/15) an ongoing flare event at its 345,000 bpd Wood River Refinery in Roxana, Illinois, following a unit trip at the facility, a filing with the Illinois Emergency Management Agency said.

The event began at approximately 3:08 p.m. CT Friday (5/15) and was ongoing at the time of the filing, the report said.

According to the incident details, a unit trip resulted in a sulfur dioxide release through a flare stack system. The filing identified sulfur dioxide emissions exceeding 500 pounds released to the atmosphere.

No mitigation measures or emergency actions were listed in the filing, and no evacuations or state assistance were requested.

The Wood River refinery primarily produces gasoline, diesel, and jet fuel.

DTN reached out to Phillips 66 for additional details but did not get an immediate response.