Midwest ULSD Basis Climbs to 1-Month High


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Midwest ultra-low sulfur diesel (ULSD) basis 
strengthened Monday (4/6) hitting a one-month high, as regional cash markets 
moved higher alongside continued distillate strength across pipeline systems.

   Chicago ULSD basis strengthened by 25cts on the session to a 10cts discount 
to May NYMEX ULSD futures, while the same product moving through the Buckeye 
Complex and the Wolverine pipeline climbed 34cts to a 10cts discount, according 
to DTN Energy data. In the Group 3 market, ULSD, commonly referred to as "X," 
strengthened by 5.50cts to a 54.50cts discount.

   The move marks the strongest level for Chicago, Buckeye and Wolverine since 
March 2, when basis traded at a 7cts discount, while Group 3 reached its 
firmest level since March 11, when it was assessed at a 50.50cts discount.

   "Fundamentals in the region are still relatively healthy, but this looks 
more like a spillover from the strength we've seen in jet," a source familiar 
with Midwest refined product trading said. "It was only a matter of time before 
that strength started to carry into ULSD as the distillate complex reprices 
higher."

   In the futures market, front-month ULSD retraced on the session, although 
the market structure remained firmly backwardated, with the May contract 
holding a premium of more than 36cts over June, reinforcing tight prompt supply 
conditions across the distillate complex.

   The move higher across Midwest pipelines reflects cash markets aligning with 
broader distillate strength, with tighter prompt supply and recent strength in 
jet fuel continuing to support ULSD pricing.




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