New York (Platts)--9Jan2014/314 pm EST/2014 GMT

US Midwest refining margins largely rebounded this week amid a surge in regional gasoline prices, after a cold snap cut production at some area refineries.

Cracking margins for West Texas Intermediate were around $18.37/b Wednesday, up from just $12.86/b Friday. West Texas Sour cracking margins rose to $18.54/b Wednesday, up from $12.76/b.

Coking margins for both crudes showed a similar increase.
Platts' margin calculations reflect the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts' product price assessments to yield formulas designed by Turner, Mason & Co.

Since Friday, spot Chicago gasoline prices have jumped nearly 10 cents/gal -- or just over $4/b -- while spot prices for WTI and WTS have come off around $1.90/b and $1.75/b, respectively.

Likewise, the Chicago pipeline RBOB crack spread to WTS is more than $8/b above its 30-day moving average.

WTI and WTS, for both cracking and coking, yield a substantial percentage of conventional 87 gasoline in Midwest refineries, according to Turner, Mason & Co. winter yield formulas.

Comparatively, US Gulf Coast cracking margins for WTI and WTS were relatively steady. WTI on the USGC saw margins rise just $2.63/b, while those for WTS rose $2.64/b.

The surge in margins comes despite a rebound in Midwest gasoline stocks. At 52.12 million barrels for the week ended January 3, regional supply is at its highest since mid-April, just ahead of summer driving demand.

But the extreme cold temperatures over much of the past week has taken its toll on several Midwest refineries, a few of which faced production issues.

Weather-related issues forced Marathon Petroleum to shut several units at its 114,000 b/d refinery in Detroit, Michigan, a company spokesman said Tuesday. Also on Tuesday, Valero spokesman Bill Day acknowledged the 180,000 b/d Memphis, Tennessee refinery underwent a "system shutdown" due to cold weather.

And while Citgo's 180,000 b/d Lemont, Illinois, refinery cited an equipment failure Monday related to the cold weather, the company said Tuesday that issues had no impact on production.

However, refineries in other regions -- some of which supply the Midwest -- also encountered problems related to the cold.

Production at the 70,000 b/d Alon USA refinery in Big Spring, Texas, returned to normal Tuesday after fans near the feed to the No. 1 sulfur recovery unit froze Monday.

And a loss of steam at PBF Energy's 180,000 b/d Paulsboro, New Jersey, refinery led to the shutdown of "most processing units," according to a company spokesman. Traders attributed the shutdowns to cold weather, however the company has not yet confirmed this.

BAKKEN MARGINS REBOUND

Midwest cracking margins for North Dakota Bakken crude rebounded as well, hitting $22.70/b Wednesday, up from just $16.18/b Friday. Bakken's Midwest gasoline crack spread rose nearly $7/b to $18.82 over that period.

Bakken cracking margins received a heavy blow last week following a train derailment and explosion on December 30.

That said, margins in the US Atlantic Coast for Bakken -- nearly all of which arrives by rail -- were up just $1.46/b to $8.45/b Wednesday from $6.99/b Friday. Bakken's crack spread, basis New York Harbor RBOB, is up just $2.90/b to $7.92/b.

On the US Gulf Coast, margins rose $3.60/b to $10.10/b, with cracks hitting $4.55/b Wednesday, up from just 19 cents/b Friday.

--James Bambino, james.bambino@platts.com
--Jeffrey Bair, jeffrey.bair@platts.com
--Travis Whalen, travis.whalen@platts.com
--Edited by Lisa Miller, lisa.miller@platts.com

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