Midwest Refined-Product Basis Drops on Futures Rollover


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Midwest refined product spot basis values fell Monday 
(10/26) as regional markets rolled to December NYMEX futures, which are in 
backwardation, and transitioned to Cycle 1, prompting pricing adjustments 
across Chicago, Buckeye and Wolverine pipeline markets.

   Buckeye Complex and Wolverine ULSD basis posted the largest declines in the 
distillate market, each dropping 20cts from Friday to trade at a 4cts gallon 
discount to December NYMEX ULSD futures, compared with a 16cts premium in the 
previous session, according to DTN Energy data.

   The weakness extended to Chicago, where ULSD basis fell 13.50cts to an 
8.50cts discount against December futures, reversing Friday's 5cts premium. 
Chicago jet fuel, however, bucked the trend, with basis advancing 12cts to an 
8cts discount to December NYMEX ULSD futures.

   Gasoline markets also registered declines following the contract rollover. 
Chicago CBOB regular basis dropped 20cts to parity with December NYMEX RBOB 
futures, while Buckeye CBOB fell 10cts to a 5cts premium. Wolverine CBOB 
declined 13cts to a 7cts premium.

   The transition to December futures, trading below November contracts, 
changed the benchmark used to calculate physical market differentials. With 
regional pipeline markets also entering Cycle 1, Monday's basis adjustments 
reflected the new pricing references rather than necessarily indicating an 
equivalent decline in underlying physical product values.




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