Shock Waves from Philadelphia Refinery Explosion Felt in Gasoline and Crude Markets

Although it is still too early to estimate the extent of the damages, this morning’s explosions and fire at the Philadelphia Energy Solutions (PES) refinery are reported to have affected an alkylation unit. Today’s incident comes just two weeks after a fire shut down a 50 MBD catalytic cracking unit, causing the refinery to operate at reduced rates. If the affected alkylation unit was significantly damaged or destroyed, PES may find it difficult to recover. So far in 2019, crude runs in PADD 1 have been below normal seasonal levels due to heavy maintenance and unplanned refinery downtime. In recent years, however, PADD 1 has at times struggled with excess refining capacity and less-than-stellar margins. A prolonged or even permanent shutdown of a significant portion of the region’s capacity would help underpin refining margins for the refiners that remain operating. Of course, prospects for a more supportive margin environment would come as the result of higher gasoline prices during periods of high seasonal demand and/or refinery maintenance. In the short term, Northeast gasoline prices will likely see gains due to the unfortunate timing of the PES fire with the beginning of this year’s summer driving season. Westbound cargos from northwest… continue reading

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Source: CTRM Center

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