Group 3 Jet Fuel Strongest in 5 Weeks; ULSD Weakens


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Group 3 jet fuel differentials extended their sharp 
rally Wednesday (6/24), surging to their narrowest discount in five weeks, 
while regional ultra-low sulfur diesel (ULSD) basis widened amid a build in 
Midwest distillate inventories.

   The spot market divergence intensified as July NYMEX ULSD futures rebounded 
in late afternoon trading.

   Group 3 jet fuel was talked at a discount of 19cts gallon to the July NYMEX 
ULSD contract, narrowing by 14cts on the day.  It was the smallest discount for 
Group 3 jet fuel since May 12, when it stood at 7cts gallon.

   The rapid strengthening reflects a localized supply squeeze, even as 
regional refining utilization remains high at 100%.

   In contrast, the basis for Group 3 ULSD widened by 6.25cts to a discount of 
27.5cts gallon against July NYMEX ULSD. In Chicago, the ULSD basis widened by 
11.5cts to a discount of 41.5cts. The weakness in diesel spot values aligned 
with official U.S. Energy Information Administration data showing PADD 2 
distillate fuel oil inventories rose by 900,000 bbl during the week ended June 
19.

   That substantial weekly build placed regional distillate inventories at 27.2 
million bbl, or 2.2 million bbl higher than the 25 million bbl logged during 
the same week last year. The inventory surplus continues to weigh on regional 
diesel values despite the volatility in the underlying futures complex.

   Regional jet fuel stocks, meanwhile, moved in the opposite direction, 
sliding by 600,000 bbl on the week to 7.8 million bbl. While those stocks 
remain 1.1 million bbl above year-ago levels, the weekly decline contributed to 
the aggressive narrowing of spot discounts across the Plains.




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