BP refinery outage jolts Midwest gasoline further

(Adds quotes, detail on differential highs and refinery outages)

By Kristen Hays

HOUSTON, Aug 12 (Reuters) - Chicago cash gasoline differentials hit their highest since 2008 this week on the prospect of a month-long shutdown of the top crude unit at BP Plc's Indiana refinery, the largest in the region, traders said on Wednesday.

While the market talked up the premium of Chicago wholesale gasoline to a range of bids and offers that were 75 cents to 80 cents over September RBOB futures on the New York Mercantile Exchange on Wednesday, traders said no deals were seen. Instead, players sat back after a flurry on Tuesday that pushed differentials to a 65-cent premium - up from a 2.5-cent discount to futures on Friday.

"No one wants to be stupid. No one wants to be the guy that buys the high," a Midwest trader said.

The trader said the 65-cent premium is the highest since 2008, when a shutdown at the same refinery in Whiting, Indiana, sent differentials to $1.40 over NYMEX RBOB.

"That lasted a week," he said.

Cash gasoline in the Group Three market rose as well, trading at a 30-cent premium to futures on Wednesday - up 35 cents from Friday.

While the shutdown of the biggest crude distillation unit at BP's 413,500 barrels-per-day (bpd) Whiting refinery gave the Midwest markets their biggest jolt, other factors played a part as well, traders said.

U.S (Other OTC: UBGXF - news) . government data on Wednesday showed a notable 905,000-barrel draw in Midwest gasoline stocks last week.

Marathon Petroleum Corp has shut units for 10 weeks of planned work at its 210,000 bpd refinery in Robinson (LSE: RBN.L - news) , Illinois - a major Chicago market supplier.

Marathon also began restarting units at its 240,000 bpd refinery in Catlettsburg, Kentucky, over the weekend after a week-long outage stemming from a power substation fire.

Valero Energy Corp on Thursday planned to restart the hydroplex at its 180,000 bpd refinery in Memphis, Tennessee, which has been down for more than a week, cutting the plant's output. The hydroplex combines gasoline feedstock hydrotreating with production of octane-boosting gasoline components.

And planned work is slated for several Midwest refineries in September and October, including Phillips 66 (NYSE: PSX - news) 's 336,000 bpd joint-venture plant in Wood River, Illinois next month - also a major Chicago market supplier.

Traders were unsure how long differentials would hover at Wednesday's levels, weighing the restarts at Catlettsburg and Memphis against upcoming fall maintenance work.

"Hype sells better than reality," a trader said. "It will find a value."

(Reporting by Kristen Hays; Editing by James Dalgleish and Andrew Hay)