MARKETWIRE ALERTS


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   MARKETWIRE ALERTS 

   MarketWire Afternoon News Sept 28:

   Updated at 5:00 PM ET 

    

   HEADLINES:

    

   -- Chicago CBOB Basis Rises 9.5cts to Merc Level 

   -- Chicago Jet Basis Dips 5cts as Distillates Diverge

   -- Analysis: Export Ban May Widen NYH-USGC Diesel Gap

   -- Dallas Fed: Texas Factory Output Surges in September 

   -- Explorer Restores Normal Operations After August Tank Fire

   -- Rack Gasoline Tumbles 16.36cts; ULSD Slide Extends

   -- CFTC: WTI Net Longs Rise as Shorts Retreat

    

   NEWS

    

   Chicago CBOB Basis Rises 9.5cts to Merc Level

   Chicago CBOB spot basis jumped 9.5cts on the day to lead Midwest gasoline 
cash markets broadly higher across regional pipeline hubs, while Midcontinent 
values weakened.

   Chicago CBOB basis surged 9.5cts to trade flat to the November NYMEX RBOB 
contract.

   In eastern pipeline markets, Buckeye Complex CBOB strengthened 2.5cts to a 
5cts gallon discount to October futures, while Wolverine CBOB rose 4.5cts to a 
3cts gallon discount.

   Bucking gains across the pipeline markets, Group 3 CBOB fell 9cts to a 13cts 
gallon discount to the November NYMEX RBOB contract.

   Physical basis strengthened as market participants squared positions ahead 
of the prompt NYMEX October RBOB contract expiration. November WTI crude 
futures also rose $0.19 to settle at $92.60 bbl.

   Regional spot strength came despite a modest draw in Midwest motor gasoline 
inventories. EIA data for the week ended September 18 showed PADD 2 gasoline 
stocks fell 500,000 bbl to 43.6 million bbl, 3.4 million bbl below the previous 
year.

   Inbound supply into the Midwest also tightened during the reporting week. 
Regional gasoline imports fell 11,000 bpd to 7,000 bpd, while refinery crude 
runs dropped 439,000 bpd to 3.802 million bpd.

    

   Chicago Jet Basis Dips 5cts as Distillates Diverge

   Chicago jet fuel basis fell Monday (9/28) as physical differentials across 
PADD 2 hubs showed mixed performance ahead of the October NYMEX ULSD contract 
expiration.

   Chicago jet fuel basis weakened by 5cts to stand at a discount of 40cts 
gallon to the October NYMEX ULSD contract. Meanwhile,  the same product basis 
in Group 3 held unchanged on the day at a 50cts gallon discount.

   Midwest ULSD spot basis values were mixed on the day as Chicago ULSD basis 
dropped 0.50cts to trade at a 1.5cts gallon discount to October futures. ULSD 
basis in the Plains slipped 0.25cts to a 1ct gallon premium, while in the 
Buckeye Complex and Wolverine pipeline ULSD basis both gained 2.50cts to settle 
at a 1.5cts gallon premium to the October NYMEX contract.

   The basis adjustments responded to the front-month futures contract expiry. 
NYMEX November WTI crude rose $0.19 to settle at $92.60 bbl, after trading 
between a high of $96.54 bbl and a low of $91.25 bbl.

   The spot price moves unfolded against a backdrop of tight regional inventory 
cover. Energy Information Administration data showed PADD 2 distillate fuel oil 
stocks drew by 1.6 million bbl during the week ended September 18 to 27.2 
million bbl, marking their lowest level since mid-June.

   The sharp inventory draw reflected a steep drop in processing throughput 
across the region. PADD 2 refiner crude utilization plunged 11 percentage 
points on the week to 89%, with crude inputs dropping by 439,000 bpd to 3.802 
million bpd.

    

   Analysis: Export Ban May Widen NYH-USGC Diesel Gap

   The price gap between New York Harbor and U.S. Gulf Coast diesel has widened 
sharply this month as regional supply conditions diverged, highlighting how a 
potential U.S. diesel export restriction could pressure USGC prices while 
providing less relief to the East Coast.

   NYH ultra-low sulfur diesel was assessed Monday (9/28) at $4.5980 gallon, a 
45cts premium to USGC ULSD at $4.1480, according to DTN market data. The spread 
has averaged 43.44cts so far in September, up from 35.30cts in August, and 
reached a one-year high of 55.59cts on September 18.

   The current spread is also well above the 34.43cts average over the past 
year and more than double the 18.25cts recorded during the comparable trading 
session in the previous year. Much of the widening occurred before discussions 
of possible export restrictions intensified last week, pointing to supply and 
transportation differences already separating the two markets.

   The possibility of restricting U.S. diesel exports gained momentum over the 
weekend after President Donald Trump said Sunday the administration was looking 
"very seriously" at a ban and "may do it." The comments followed conflicting 
signals last week, when the White House denied a report that it was preparing a 
90-day export ban and Energy Secretary Chris Wright said a flat ban would not 
work and could eventually reduce refinery runs and affect gasoline and jet fuel 
supply.

   The Gulf Coast would have the greatest direct exposure to an export 
restriction because PADD 3 is the country's main diesel-producing and export 
region. Fewer overseas shipments would leave more barrels competing for 
domestic buyers and storage, potentially weighing on USGC ULSD prices and 
refining margins.

   Getting that additional supply to NYH presents a different challenge. 
Colonial Pipeline is the main refined-products artery between the Gulf and East 
coasts, carrying gasoline, diesel, heating oil and jet fuel through its roughly 
5,500-mile system from Houston to the New York Harbor area. The system can 
transport about 2.5 million bpd and has historically operated at or near 
capacity, according to the Energy Information Administration.

   NYH is therefore supplied through a combination of Gulf Coast pipeline 
shipments, regional refinery output and waterborne imports. PADD 1 imported an 
average 124,000 bpd of distillate fuel in 2025, accounting for nearly 80% of 
total U.S. distillate imports, EIA data shows.

   Imports have remained part of the regional supply mix this year. PADD 1 
distillate imports averaged 197,000 bpd in January and 265,000 bpd in February 
before falling to 91,000 bpd in June. Canada supplied all 91,000 bpd imported 
into the region during June, according to EIA.

   Those logistics mean a diesel surplus developing on the Gulf Coast would 
still need available pipeline or marine capacity to reach Northeast consumers. 
NYH also remains connected to the Atlantic Basin through waterborne supply, 
leaving the market more exposed than USGC to international diesel prices.

   The regional difference is also evident in implied refining margins. Using 
West Texas Intermediate crude as a common benchmark, the implied USGC ULSD 
crack stood at $79.16 bbl Monday compared with $98.06 bbl for NYH, according to 
DTN market data. The $18.90-bbl difference corresponds with the 45cts gallon 
NYH premium.

   Over the past year, the USGC crack has averaged $47.16 bbl compared with 
$61.62 bbl for NYH. The gap has increased this month, with the NYH crack 
averaging $107.96 bbl through September 28 versus $89.72 bbl for USGC.

   Both cracks reached one-year highs on September 16, with USGC at a record 
$106.90 bbl and NYH at $117.71 bbl. Two days later, the NYH-USGC outright 
spread widened to its one-year high of 55.59cts gallon.

   Domestic and Global Impact

   An export restriction could put additional pressure on that regional 
relationship. With fewer outlets for Gulf Coast production, USGC prices and 
margins could come under pressure first, while the effect in NYH would depend 
on pipeline flows, regional production and the availability and cost of 
imported barrels.

   U.S. diesel exports have helped replace supplies lost this year from the 
Persian Gulf and Russia. Restricting those shipments would remove barrels from 
an already tight international market, potentially supporting the price of 
waterborne diesel available to the Atlantic Basin even as additional supply 
accumulates on the Gulf Coast.

   A prolonged restriction could eventually affect refinery economics as well. 
If weaker USGC diesel margins make incremental production less attractive, Gulf 
Coast refiners could reduce crude runs rather than continue building surplus 
product. Wright cited that possibility last week in arguing against a flat 
export ban.

   The initial effect of an export restriction could therefore be concentrated 
on the Gulf Coast rather than evenly distributed across U.S. markets. USGC has 
the country's largest outlet to the export market, while NYH must balance Gulf 
Coast pipeline supply with regional production and imports, leaving 
transportation capacity and Atlantic Basin prices important in determining how 
much relief ultimately reaches the Northeast.

    

   Dallas Fed: Texas Factory Output Surges in September

   Texas manufacturing activity accelerated sharply in September, with 
production, new orders and shipments posting robust gains even as 
manufacturers' broader business outlook moderated, the Federal Reserve Bank of 
Dallas reported Monday (9/28).

   The Texas Manufacturing Outlook Survey's production index, a key measure of 
state manufacturing conditions, jumped 13 points to 29.5 in September, 
indicating a strong pace of output expansion.

   Other measures of factory activity also strengthened. The capacity 
utilization index climbed 11 points to 23.9, while the shipments index 
increased by the same amount to 24.8. The new orders index advanced to 30.7 
from 22.0. All three readings were above their respective historical averages.

   Broader business conditions remained positive, although sentiment was less 
upbeat than in August. The general business activity index edged down to 9.8 
from 11.6, while the company outlook index fell to 8.7 from 19.2. The outlook 
uncertainty index increased three points to 11.3.

   Hiring strengthened during the month, with the employment index rising seven 
points to 15.1 from 8.0. The hours worked index was little changed at 5.6 
compared with 5.9 in August.

   Manufacturers also reported increased cost pressures. The raw materials 
prices index jumped eight points to 52.2, well above its series average of 
28.0, while the finished goods prices index rose five points to 27.6. The wages 
and benefits index increased six points to 27.4.

   Expectations for factory production remained strong despite the moderation 
in the broader outlook. The future production index was little changed at 40.3, 
while the future general business activity index fell sharply to 20.8 from 37.2 
but remained firmly in positive territory.

   The September results suggest Texas manufacturers entered the fall with 
accelerating output and demand, but rising input costs and a less optimistic 
assessment of future business conditions could temper expectations for the 
months ahead.

   The Dallas Fed collected responses from September 15 through September 23, 
with 63 of 113 Texas manufacturers surveyed responding. The bank's next Texas 
Manufacturing Outlook Survey is scheduled for October 26.

    

   Explorer Restores Normal Operations After August Tank Fire

   Explorer Pipeline has fully restored normal operations along its 1,830-mile 
system following an August 17 tank farm fire in Tulsa, Oklahoma, easing 
midstream flow constraints into Midwest distribution hubs.

   "Operations are back to normal," Catherine Divis, spokesperson for Explorer 
Pipeline Company, confirmed in an email response on Friday (9/25) to a DTN 
query.

   The return to normal service resolves weeks of operational uncertainty 
across regional supply channels after the fire damaged three tanks at the 
line's Glenpool breakout station, restricting batch scheduling and product 
movements into Wood River and Chicago hubs.

   The restoration of full pipeline throughput provides much-needed logistical 
relief to Midwest fuel markets, where spot traders had been navigating thin 
liquidity and severe basis swings amid concurrent refining disruptions.

   Regional supply balances faced additional pressure earlier this month 
following a September 13 site-wide power outage and secondary pump flooding at 
ExxonMobil's 275,000 bpd Joliet refinery in Channahon, Illinois, which 
temporarily restricted refined product flows into major Chicago distribution 
channels.

   Energy Information Administration data showed PADD 2 refiner crude 
processing dropped to 3.802 million bpd for the week ended September 18, 
pulling regional utilization down 11 percentage points to 89% and driving 
distillate inventories down by 1.6 million bbl to a multi-month low of 27.2 
million bbl.

   With pipeline operations fully restored and Joliet units undergoing 
step-by-step restart procedures, physical market participants expect steadying 
inbound product flows to help stabilize regional spot basis levels as 
agricultural harvest demand accelerates across the Midcontinent.

    

   Rack Gasoline Tumbles 16.36cts; ULSD Slide Extends

   Volatility from the prior week extended for the U.S. fuel rack Monday (9/28) 
as wholesale gasoline prices fell sharply across all five PADDs while ultra-low 
sulfur diesel (ULSD) declined for a third consecutive session even as crude oil 
and product futures rebounded.

   Nationwide conventional unleaded gasoline rack prices averaged $3.4354 
gallon, down 16.36cts from Friday's $3.5990 gallon, according to DTN data.

   ULSD rack prices averaged $4.9375 gallon, down 4.65cts from the previous 
trading session's $4.9839 gallon.

   The rack declines contrasted with a stronger futures market Monday after 
U.S. President Donald Trump rejected an Iranian proposal aimed at ending the 
conflict, reducing expectations for an immediate diplomatic resolution.

   NYMEX WTI traded near $95.70 bbl Monday morning, up $3.28 on the day. 
Front-month New York Harbor ULSD advanced about 3.4cts to $4.8841 gallon, while 
RBOB gasoline rose 4.43cts to $3.4377 gallon.

   Refining margins also strengthened for distillates. The diesel crack climbed 
about $5 to $109.36 bbl, while the gasoline crack weakened $1.33 to around 
$48.64 bbl.

   Gasoline racks fell across all five regions. Gulf Coast values posted the 
largest decline, dropping 18.21cts to $3.2587 gallon, closely followed by East 
Coast prices, which fell 17.83cts to $3.2433 gallon. West Coast gasoline 
declined 15.52cts to $4.2732 gallon, Midwest values dropped 14.35cts to $3.1922 
gallon and Rocky Mountain prices fell 11.34cts to $3.9745 gallon.

   PADD 5 maintained the largest gasoline premium to the national average at 
83.78cts, while PADD 2 held the widest discount at 24.32cts.

   ULSD racks also declined across all five PADDs. West Coast values posted the 
largest drop, falling 14.04cts to $5.2658 gallon. Gulf Coast prices fell 
5.47cts to $4.7864 gallon, East Coast ULSD declined 2.19cts to $4.7954 gallon, 
Midwest values slipped 1.66cts to $4.9701 gallon and Rocky Mountain prices 
edged down 0.98ct to $5.2997 gallon.

   PADD 5 maintained the widest ULSD premium to the national average at 
32.83cts, while PADD 3 held the largest discount at 15.11cts.

   Valero McKee Refinery Reports FCCU Opacity Event

   Valero Energy Partners' 200,000 bpd McKee refinery in Sunray, Texas, 
experienced an excess opacity event after a safety system was activated at the 
fluid catalytic cracking unit, or FCCU, according to a filing with the Texas 
Commission on Environmental Quality (TCEQ).

   The event occurred Thursday (9/24) from 7:24 p.m. to 9:18 p.m. CT and was 
reported Friday (9/25). Opacity at the FCCU stack reached 96.94%, above the 
permitted limit of 35%.

   According to the filing, the FCCU's Safety Instrumented System activated as 
designed and de-energized the unit's electrostatic precipitator, or ESP, which 
controls particulate emissions from the FCCU stack.

   The FCCU is a key gasoline-producing unit, converting heavier refinery 
streams into gasoline blendstocks and other lighter products, making its 
operations particularly relevant to regional gasoline supply. The filing did 
not indicate whether FCCU production was affected.

   The McKee refinery primarily produces gasoline, diesel and jet fuel.

   DTN reached out to Valero Energy for additional details but did not get an 
immediate response.

    

   CFTC: WTI Net Longs Rise as Shorts Retreat

   Money managers increased their net bullish positioning in NYMEX West Texas 
Intermediate (WTI) crude during the week ended September 22 as a sharp 
reduction in short positions outweighed a decline in outright longs.

   Noncommercial long positions in WTI held by money managers fell by 10,392 
contracts to 360,810 during the reference week, according to weekly Commitment 
of Traders data released Friday (9/25) by the Commodity Futures Trading 
Commission (CFTC).

   Noncommercial short positions declined by 15,593 contracts to 219,704 during 
the same week, the CFTC data showed.

   This caused the net noncommercial long position in WTI to increase by 5,201 
contracts to 141,106. Open interest, meanwhile, fell by 113,953 contracts to 
1,841,811.

   Noncommercial spread positions in WTI dropped by 47,795 contracts to 557,266 
during the same week.

   Total long positions in WTI futures fell by 106,001 contracts to 1,765,465, 
while total short positions declined by 106,171 contracts to 1,794,248.




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