Why did the 3:2:1 crack spread only widen to 62.09 while crude jumped 17%?
The 3:2:1 crack spread is 62.09, up 2.05 over the past thirty days. Over that same month WTI crude rose 17.0%. A crack spread is what a refiner earns turning three barrels of crude into two of gasoline and one of diesel, so when the crude a refiner buys climbs that fast and the spread barely moves, I want to know what held the spread up and who is keeping the margin.
Start with crude. WTI is 91.48, up 17.0%, with a thirty-day high of 107.77 and a low of 68.25. Brent is 96.28, up 15.2%. Both moved on the war news the wire is full of. Ukrainian drones have hit Russian refineries and U.S. forces struck three Iranian tankers near Kharg Island. Goldman Sachs told Bloomberg oil could reach $120 if shipping attacks widen. That is a plain supply-fear rally in the raw material. On its own, a 17% jump in the input should crush the crack spread, because the barrel a refiner starts with got more expensive. The spread did not get crushed, so the products had to rise about as fast.
They did, but not evenly. ULSD diesel futures are 4.54, up 16.3%, nearly matching crude step for step. RBOB gasoline is 3.215, up only 7.7%, roughly half as fast as crude. Diesel is carrying the crack spread almost by itself while gasoline lags well behind.
The wire says why. Reuters, quoted on OilPrice, reports refiners are prioritizing diesel and letting shipping fuel supply tighten, with Energy Aspects putting the marine fuel shortfall at 218,000 barrels a day this quarter. The U.S. Energy Secretary tied record diesel prices to the Ukrainian strikes on Russian refineries. When those refineries go offline the barrels the world loses first sit in the middle of the barrel, diesel and jet, and that is the product holding its price against the crude rally. Gasoline has no such shortage story right now, which fits it trailing at 7.7%.
So the crack spread held near flat because the diesel half kept pace with crude while the gasoline half fell behind, and the two roughly cancelled to a small net gain of 2.05. A refiner running today earns close to what they did a month ago per barrel of crack, give or take, but the mix of where it comes from has tilted hard toward diesel.
Now to where the margin lands. The crack spread is a refinery number, not what the retailer keeps. For that I looked at the diesel retail-wholesale spread, the money between the wholesale rack price and the pump: 1.104, down 0.367 over the same thirty days while everything else rose.
Put the two diesel numbers side by side and the picture sharpens. Diesel futures, the wholesale side, are up 16.3%. U.S. retail diesel is 5.599, up only 4.7%, with a thirty-day high of 5.652 barely above where it is now. Wholesale ran up more than three times as fast as the pump. When wholesale climbs faster than retail, the retailer's cut over their own cost narrows, and that is the 0.367 the retail-wholesale spread just gave back.
This month the margin is landing upstream, at the refinery, on diesel. The refiner captured the crude rally by holding diesel prices up against it. The marketer and the retailer, buying at a rack that rose 16.3% and selling at a pump that rose 4.7%, are absorbing part of that climb rather than passing all of it through, at least so far. Retail diesel tends to catch up on a lag, so 1.104 could widen back out in the coming weeks if wholesale holds, but right now the retail end is the thin part of the chain.
A few things keep me from calling it cleanly. The crack spread is a benchmark formula, not any one refiner's real yield, and a plant configured heavy for diesel is doing far better than 62.09 suggests while a gasoline-heavy one is doing worse. The retail diesel figure is a national average and hides wide regional spreads, especially on the East Coast that leans on imported diesel. And every product number here rests on crude staying where it is. If the shipping risk Goldman flagged eases, crude could fall faster than diesel and the whole picture inverts inside a week.
What I am sure of: the crack spread barely moved, 62.09 and up only 2.05, because diesel rose about as fast as crude while gasoline rose roughly half as fast, and diesel did it on a real war-driven supply loss rather than on demand. The margin this month, I am fairly sure, is landing at the refinery on the diesel cut, with the retail end carrying more of the wholesale run-up than it passes on, shown by the retail-wholesale spread falling to 1.104. Whether that holds I cannot tell you, because it depends on crude, and crude depends on the next headline out of the Black Sea and the Gulf.
And that was just the data. See you tomorrow.