Refining spot cracks and forward curves increased week over week, while utilization remained above the five-year seasonal range

Overview

This report tracks key high-frequency indicators for the refining and marketing industry, including regional 321 crack spreads, forward curves, US DOE refinery utilization, Chinese refinery utilization, crude oil imports, refined products demand, and Jefferies' proprietary US gas station traffic data. The core conclusion is that most spot refining margins and forward curves improved this week, US refinery utilization remains well above the historical seasonal range, but year-over-year weakening in traffic signals pressure on the demand side.

Core views

Overall, the report conveys a moderately positive short-term signal for refining margins. Spot cracks generally increased week over week, and current margins in several regions are significantly above their one-, three-, and five-year averages, indicating that the short-term earnings environment for refiners remains strong. At the same time, total US refinery utilization reached 96.6%, indicating high operating intensity across the industry. However, an approximately 1.8% year-over-year decline in gas station traffic and an approximately 0.7% year-over-year decline on a rolling three-month basis mean that end-market gasoline demand still requires cautious validation.

Analysis framework

Jefferies assesses refining industry margins and demand trends by comparing regional crack spreads cross-sectionally, comparing week-over-week changes with historical averages, tracking changes in forward curves, and incorporating DOE refinery utilization, PADD-level data, company-related indicators, and proprietary gas station traffic data. The report also lists regional indicators for MPC, PSX, and VLO to observe marginal changes in the regions to which different refiners are exposed.

Methodology notes

• High-frequency industry indicators321 crack spread

  Proxy for refining margins

  The 321 crack spread typically approximates refining margins using the spread from converting three barrels of crude oil into two barrels of gasoline and one barrel of distillate; a wider spread generally benefits refiners' short-term earnings.

• Market term structureForward curve analysis

  Forward refining margin expectations

  By observing week-over-week changes in one-, three-, and six-month forward 321 crack spreads, the analysis determines whether market expectations for future refining margins are improving.

• Supply and operationsRefinery utilization

  Operating intensity and supply elasticity

  DOE refinery utilization reflects the operating load of US refineries. Utilization above the historical range generally indicates strong operations, but it may also create pressure from increased refined products supply.

• Demand trackingGas station traffic data

  Proxy for gasoline consumption demand

  Jefferies uses proprietary US gas station traffic data to help assess end-market gasoline demand; year-over-year declines indicate that consumer demand may be weaker than refining margin performance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• US refiners (MPC, PSX, VLO)

  Refining margin improvements are generally positively correlated

  Strengths

  Multiple regional crack spreads increased week over week and were significantly above historical averages, supporting short-term refining earnings.

  Weaknesses

  Regional exposure varies by company; weak PADD 1 utilization and declining end-market traffic could limit demand improvement.

  Comparison

  Indicators for MPC, PSX, and VLO all showed week-over-week improvement in several regions, but the specific benefit depends on asset footprints and crude/product slates.

  Risks

  Weakening demand, declining spreads, supply pressure from excessive utilization, and crude oil price volatility.

• 321 crack spreads and refined products margins

  Core industry cycle indicator

  Strengths

  Most indicators, including USGC Cushing, WC ANS, Mid-Con, NW Europe, and Asia Minas, improved week over week.

  Weaknesses

  Some gasoline-related indicators declined week over week, such as the RBOB Gasoline-WTI Crack Spread Front Month, which fell 7%.

  Comparison

  Diesel and regional 321 spreads generally outperformed some gasoline crack spreads.

  Risks

  Weaker-than-expected refined products demand, inventory builds, and a weakening forward curve.

• US refinery utilization

  Reflects supply and operating intensity

  Strengths

  Total utilization was 96.6%, above multiple historical averages, indicating strong industry operations.

  Weaknesses

  Excessively high utilization may increase refined products supply and pressure future spreads.

  Comparison

  PADD 2 and PADD 3 were significantly stronger than PADD 1.

  Risks

  Unplanned maintenance, hurricane-season disruptions, and regional supply-demand mismatches.

• Refined products demand

  Determines the sustainability of crack spreads

  Strengths

  High margins and high utilization indicate that the current market can still absorb a high operating load.

  Weaknesses

  Jefferies' gas station traffic data showed an approximately 1.8% year-over-year decline in April and an approximately 0.7% year-over-year decline on a rolling three-month basis.

  Comparison

  Margin performance was stronger than traffic-based demand signals.

  Risks

  Weaker-than-expected seasonal gasoline demand, macroeconomic slowdown, and reduced consumer travel.

Key data

• Jefferies Global Composite 4-Wk Moving Average marginUp 3% week over weekThe text states that the Jefferies Global Composite 4-Wk Moving Average margin increased 3%.
• USGC Cushing 321 crack spread$58.48, +16% week over weekAlso 149.1% above the 3Q25 average and 128.7% above the five-year average.
• WC ANS 321 crack spread$51.99, +13% week over week75.1% above the 3Q25 average and 64.4% above the five-year average.
• Mid-Con 321 crack spread$50.88, +12% week over week114.1% above the 3Q25 average and 107.4% above the five-year average.
• NW Europe Brent GC 321 crack spread$55.05, +15% week over week171.4% above the 3Q25 average and 155.9% above the five-year average.
• Asia Minas 321 crack spread$28.64, +5% week over week122.2% above the 3Q25 average and 90.8% above the five-year average.
• WTI Cushing 321 one-month forward$58.09, +6% week over weekThe forward curve increased week over week, indicating improved near-term margin expectations.
• WTI Cushing 321 three- and six-month forwards3-month $44.36, +4% week over week; 6-month $34.43, +2% week over weekThe deferred tenors remain below the prompt tenor, but both improved week over week.
• Total US refinery utilization96.6%As of 2026-06-26, above the QTD average of 92.9%, the 2026 average of 92.2%, the one-year average of 92.6%, and the three-year average of 90.7%.
• PADD utilizationPADD 1 at 68.3%, PADD 2 at 99.8%, PADD 3 at 98.1%Utilization in PADD 2 and PADD 3 was notably high, while PADD 1 was significantly weaker.
• US gas station trafficApproximately -1.8% year over year in April, approximately -0.7% year over year on a rolling three-month basisJefferies' proprietary traffic data points to signs of weakening end-market demand.

Impact & implications

If crack spreads and forward curves remain elevated, short-term profit and cash flow expectations for US refiners could be supported, particularly for companies such as MPC, PSX, and VLO with exposure to Gulf Coast, Mid-Con, and West Coast margins. However, high utilization also implies increased refined products supply; if gas station traffic continues to weaken, current elevated margins could face downside risk.

Risks

• Weakening end-market gasoline demand could undermine the sustainability of current crack spreads.
• High US refinery utilization could increase refined products supply and compress future margins.
• Volatility in crude oil prices, regional spreads, and refined products inventories could cause refining margins to decline rapidly.
• PADD 1 utilization was significantly below that of other regions, indicating regional divergence in operations and supply-demand conditions.
• The report provides no single-company target prices or earnings forecasts; investment conclusions require further validation using company-level asset footprints and financial models.

What to watch

• Whether USGC Cushing 321, Mid-Con 321, and West Coast 321 crack spreads remain above historical averages.
• Whether the one-, three-, and six-month WTI Cushing 321 forward curve continues to move higher or begins to decline.
• Whether total US DOE refinery utilization and high utilization in PADD 2 and PADD 3 are sustained.
• Whether Jefferies' US gas station traffic data and EIA refined products demand data confirm improving demand.
• Refining margins, throughput, and regional profit contributions subsequently reported by MPC, PSX, and VLO.