Chicago ULSD Basis Rises Tracking Buckeye, Wolverine


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The basis for Chicago ultra-low sulfur diesel (ULSD) 
climbed by more than 50cts on Friday (5/8) following a sharp gain in the 
Buckeye and Wolverine markets during the previous trading session amid 
tightening supply.

   ULSD basis in Chicago rose 50.5cts to a 75.5cts gallon premium over NYMEX 
ULSD for June delivery, the highest since May 1, when the basis stood at 
78.50cts gallon, DTN data showed.

   Traders noted that buyers were paying huge premiums this week for Midwest 
ULSD on fears of a near-term squeeze in diesel supply after U.S. Energy 
Information Administration (EIA) data showed a weekly drop in stockpiles.

   The EIA reported on Wednesday (5/6) that distillate fuel oil inventories in 
the Midwest dropped by 1 million bbl to 24.9 million bbl during the week ended 
May 1.

   Despite the weekly decline, PADD 2 distillate balances remained slightly 
above the 24.7 million bbl reported in the same week of the previous year, the 
EIA data showed.

   On Thursday (5/7), the ULSD basis for Buckeye and Wolverine stood at 80cts 
gallon above front-month NYMEX, before both gave back 4.5cts each in the latest 
session to align with the premium for Chicago ULSD.

   "The basis for all three is now the same, though the price itself is a lot 
more elevated than you'd expect," a Midwest fuels trader, who's familiar with 
the situation, told DTN.

   Midwest jet fuel, meanwhile, saw modest price moves this week, after the EIA 
reported that jet fuel inventories in the region rose by 100,000 bbl to 7.2 
million bbl during the week ended May 1, standing 6.7 million bbl above 
year-ago levels.

   On Friday, the basis for Chicago jet fuel were flat at 35cts gallon over the 
front-month ULSD futures contract for a third straight session. In the 
Midwest's Group 3, the differential for jet fuel moved down 3cts to stand at 
8cts gallon versus the same benchmark. 

    




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