If you read yesterday's blog post, you know that there was an upset at an Alberta, Canada based oil producer, Suncor. They reported a fire at their facility on the 15th,
which will ultimately mean between 4 and 4.5 million barrels of oil will not be shipped to refiners in the Midwest as expected in the next few weeks.
That would likely mean a decent size drop in oil supplies in the Midwest while Suncor takes two to four weeks to repair their facility and resume shipping oil to Midwest-based refineries such as BP, Citgo, ExxonMobil, etc.
The massive BP refinery based in Whiting, Indiana accounts for over 10% of production of gasoline (READ MORE!) and other products in the Midwest and relies on a majority of sour Canadian crude sent via pipeline from Suncor to BP's facility.
Gasoline produced in the Midwest was some of the cheapest gasoline in the nation this morning, but has begun to trade higher as traders realize that this may reduce supply in the Midwest.
While I can't see prices in the Midwest rising more than 10-cents a gallon, I'll keep a close eye on it and update you as the situation warrants. Right now wholesale gasoline prices in Chicago have marched a few pennies higher, but that might increase once traders see a DOE report reflecting the shutdown in Canada. This shouldn't be too big of a deal, but we will likely see a small increase in prices.
Stay tuned for more information!