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Refinery margins watch

Crack spreads, utilization, and turnarounds: how refinery economics set the bid for discounted heavy barrels like Western Canadian Select (WCS).

Read this page as the demand-side bid under the heavy barrel. The 3-2-1 crack spread is the industry's shorthand for refinery profitability, utilization shows how hard plants are running, and the turnaround calendar shows when crude demand dips. Every bullet carries its vintage. Regional benchmarks differ, so compare like with like.

Refinery margins are the demand-side bid under every heavy barrel. Record 2026 cracks have kept US refineries, especially the coking-heavy plants of PADD 2 (the Petroleum Administration for Defense District covering the Midwest), running at or above nameplate, which is what absorbs Canadian heavy crude and holds the Western Canadian Select (WCS) differential tight. When margins compress and runs fall, discounted heavy barrels strand first and the differential widens. The February 2024 Whiting outage showed the mechanism in a single day.

Updated September 24, 2026 · refreshes every 14 days

What the 3-2-1 crack spread measures

• A crack spread measures the difference between the purchase price of crude oil and the selling price of finished products, such as gasoline and distillate fuel, that a refinery produces from the crude. It is an indicator of the short-term profit margin of refineries, but it excludes other variable costs and all fixed costs.
  Explainer dated 2013, content current; accessed 2026-09-24 US Energy Information Administration (EIA), crack spread explainer
• The 3-2-1 spread approximates the product yield at a typical US refinery: for every three barrels of crude oil processed, the refinery makes two barrels of gasoline and one barrel of distillate fuel.
  Explainer dated 2013, content current; accessed 2026-09-24 US Energy Information Administration (EIA), crack spread explainer
• The calculation: add the spot price for two barrels of gasoline to one barrel of diesel (multiplying per-gallon quotes by 42 gallons per barrel), subtract the price of three barrels of crude, and divide by three to get a spread in dollars per barrel.
  Explainer dated 2013, content current; accessed 2026-09-24 US Energy Information Administration (EIA), crack spread explainer
• The 3-2-1 crack spread is the most widely used benchmark for US refiner profitability. It is traded on the New York Mercantile Exchange (NYMEX), where refiners use it as a hedging instrument to lock in their margins.
  Jul 17, 2026; accessed 2026-09-24 Reuters (via BOE Report)

2026: a record-margin year

• On July 17, 2026, the 3-2-1 crack spread closed at $69.66 per barrel, a record high for the third consecutive session. Diesel, the biggest portion of global oil consumption, was the primary driver. US diesel stockpiles were just over 102 million barrels, nearly 11 million below the February 27 level and about 8 million below the five-year seasonal average, per US Energy Information Administration (EIA) data.
  Jul 17, 2026; accessed 2026-09-24 Reuters (via BOE Report)
• The West Texas Intermediate (WTI) 3-2-1 crack spread hit $59 per barrel in August 2026, nearly triple its January level and the highest since the 2020 pandemic crash. The 2010 to 2021 average was about $19 per barrel. The six-month forward curve was pricing about $44, still 35% above the long-run average.
  Aug 2026; accessed 2026-09-24 AINvest (market commentary)
• The diesel crack crossed $100 per barrel in August. Gasoline refining margins were $45 to $50 per barrel and jet kerosene $70 to $75, per BloombergNEF data. Diesel effectively left its historical range.
  Aug 22, 2026; accessed 2026-09-24 Seven Gates Research (citing BloombergNEF)
• By September 24, the gasoline-over-crude margin had widened to about $58 per barrel, more than triple the 20-year median of $17 and in the 99.8th percentile of every trading day since 2006. US refinery utilization hit 97.4% in late August, the highest since 2018.
  Sep 24, 2026; accessed 2026-09-24 Real Investment Advice (daily market update)
• The spike's drivers: the Iran war disrupted Middle East product exports, Russia restricted diesel exports, Ukrainian drone strikes hit 21 of Russia's 38 large refineries, and US refiners became the supplier of last resort, pushing fuel exports to record highs while domestic stockpiles drained.
  Jul to Sep 2026; accessed 2026-09-24 Reuters (via BOE Report); Real Investment Advice

PADD 2: the Midwest runs flat out

• In August, US refinery utilization was 97.4% nationally and 101.8% in the Midwest (PADD 2, the Petroleum Administration for Defense District covering the Midwest), per EIA and BloombergNEF data. Readings above 100% reflect the EIA measuring gross input against nominal operable capacity, with debottlenecking pushing actual throughput above it.
  Aug 22, 2026; accessed 2026-09-24 Seven Gates Research (citing EIA and BloombergNEF)
• For the week ending September 18, 2026, US refiners processed less crude, and it was not seasonal maintenance: Exxon's Joliet refinery had been mostly offline since the prior Sunday after a power outage, with floodwater also an issue. The plant accounts for 6 to 8% of regional refining capacity, and the PADD 2 utilization drop pressured an already tight Midwest product market.
  Week ending Sep 18, 2026; accessed 2026-09-24 Tim Dallinger (EIA Weekly Petroleum Status Report summary)
• That same week, US gasoline inventories were about 6% below the five-year seasonal average and distillate about 12% below. Simple cracks moved back toward record high rates.
  Week ending Sep 18, 2026; accessed 2026-09-24 Tim Dallinger (EIA Weekly Petroleum Status Report summary)
• Marathon Petroleum's Q2 2026 refining margin more than doubled to $36.33 per barrel from $17.58 a year earlier, on higher crack spreads across all operating regions. Its refineries ran at 94% of capacity with 2.9 million barrels per day of throughput. The Mid-Continent regional margin was $33.68 per barrel.
  Q2 2026 results, reported Aug 2026; accessed 2026-09-24 OilPrice.com (Marathon Q2 2026 results); Zacks (key metrics)

How margins pull heavy barrels

• Midwest refiners invested billions of dollars in coking units to turn Canadian heavy crude into gasoline and diesel. BP's 430,000 barrel-per-day Whiting, Indiana refinery can process up to 85% heavy crude, up from 20% before the upgrades. That conversion hardware is the structural bid under WCS.
  2018 (structural background); accessed 2026-09-24 Reuters (via MarineLink)
• The flip side: when Whiting shut down on a transformer failure in February 2024, the WCS discount to WTI widened from $18.10 to $19.00 per barrel on CalRock brokerage marks in a single session, on fears of lost heavy-crude demand. Midwest refinery demand is the marginal bid under the barrel.
  Feb 2024; accessed 2026-09-24 BOE Report (Reuters reporting)
• The same mechanism showed up in September 2026: with Exxon's Joliet refinery offline after a power outage, US refiners processed less crude and Canadian crude imports fell the most week on week. When Midwest runs drop, Canadian barrels are the first to feel it.
  Week ending Sep 18, 2026; accessed 2026-09-24 Tim Dallinger (EIA Weekly Petroleum Status Report summary)

Turnarounds: the fall maintenance window

• Imperial Oil scheduled full turnarounds at two Canadian refineries in 2026: the 197,000 barrel-per-day Strathcona refinery near Edmonton in Q2, and the 124,000 barrel-per-day Sarnia refinery in Q3 and Q4.
  Dec 2025 guidance; accessed 2026-09-24 Oil and Gas Journal (citing Imperial Oil 2026 guidance)
• Irving Oil's 320,000 barrel-per-day Saint John, New Brunswick refinery, Canada's largest, began a two-month turnaround in September 2026 running to mid-November, an extended maintenance window over its historical 30 to 35 day turnarounds.
  Jul 17, 2026; accessed 2026-09-24 Reuters (via Pipeline and Gas Journal)
• US refinery maintenance typically peaks in October, but shipbroker Gibson reported very little confirmed for autumn 2026 because robust margins kept refiners from taking units offline. US utilization was 97.4%, the highest since 2018. The only confirmed PADD 3 turnaround was Exxon's Beaumont fluid catalytic cracker (FCC) and hydrotreaters for about 45 days from early December to mid-January.
  Aug 31, 2026; accessed 2026-09-24 Hellenic Shipping News (citing shipbroker Gibson)
• Gulf Coast plants ran so hard in the first half of 2026 that deferred work accumulated: catalyst replacements, heat exchanger cleaning, and inspections all compressed into the September to November window. Facilities that ran the most Venezuelan heavy crude face heavier than normal coker and hydrocracker maintenance.
  Sep 2026; accessed 2026-09-24 BIC Magazine

Where sources disagree

• Peak 2026 3-2-1 level: Reuters (NYMEX 3-2-1, Jul 17, 2026) vs BIC Magazine (Gulf Coast contractor outlook, Sep 2026). Reuters reported the exchange-settled 3-2-1 closing at a record $69.66 per barrel in July, while BIC describes the 3-2-1 peaking 'above $54' in Q2 and compressing 'toward $20'. Different benchmark constructions (NYMEX-settled versus regional PACE-style estimates) and different observation dates explain the divergence.
• Diesel crack estimates: Seven Gates Research (BloombergNEF, Aug 22, 2026) vs AINvest (Aug 2026). Seven Gates put the US diesel crack above $100 per barrel in August, AINvest at roughly $95. Benchmark and date differences; both describe the same record diesel margin environment.
• Utilization above 100%: Seven Gates Research (Midwest 101.8%, Aug 2026) vs EIA methodology. Above-nameplate readings are a measurement artifact: the EIA measures gross input against nominal operable capacity, and debottlenecking pushes actual throughput above it. Do not read 101.8% as literal over-design operation.

For the WCSB book, this page is the demand-side complement to the supply watches: watch PADD 2 utilization and the fall turnaround slate the way you watch TMW. While cracks sit near record highs, refineries have every incentive to run hard and bid for discounted heavy barrels, which supports WCS. The risk is the turn: when maintenance or margin compression takes runs down, heavy barrels lose their bid first.

Standing watch

What the daily feed updates on this page.

• US Energy Information Administration (EIA) weekly refinery utilization by Petroleum Administration for Defense District (PADD)
• 3-2-1 crack spreads for West Texas Intermediate (WTI) at the US Gulf Coast and Chicago
• US Midwest (PADD 2) refinery runs and heavy crude throughput
• Planned refinery turnarounds affecting Western Canadian Select (WCS) demand
• Refined product inventories (gasoline, distillate) vs five-year averages
• Heavy crude differentials (WCS, Maya, Mars) as refinery appetite gauges

Gaps

• Forward crack spreads, such as the roughly $44 per barrel six-month forward quoted in August commentary, are trader marks, not published by the EIA. The EIA publishes historical price series, not forward margins.
• Refinery-level crude slates, including how much WCS each PADD 2 plant runs, are proprietary. The market only sees the effect when a plant goes down.
• Turnaround schedules are voluntary disclosures. Shipbroker Gibson notes not all maintenance is reported, so the fall calendar is always incomplete.

Sources