Midwest 2025 Distillate Basis Hit by Whiting Refinery Outage


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- 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.




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