MARKETWIRE ALERTS
Barani Krishnan
DTN Refined Fuels Market Reporter
MARKETWIRE ALERTS
MarketWire Afternoon News Sept 9:
Updated at 5:00 PM ET
HEADLINES:
-- Group 3 ULSD Basis Plummets 52cts as Sellers Slash Price
-- API: Crude Stocks Draw by 300,000 Bbl, Gasoline Drops 1.9M
-- EIA STEO: 2026 Retail Diesel Price Outlook at $5.07 Gallon
-- EIA: STEO Eyes Brent at $91, WTI at $84.65 in 2026
-- EIA: New England NatGas Nears Record Discount to Benchmark
-- BTS: Freight TSI Drops 2% Y-o-Y in July
-- U.S. Rack ULSD Hits Nearly $5 gallon, a 91.5% Y-o-Y Rise
-- EIA: U.S. Retail Diesel Averages Record High of $5.967 Gal
-- EIA: U.S. Gasoline Up 8.6cts, Highest Since June
-- Oil Back Above $100 BBL Fuels Demand Destruction Woes
-- ExxonMobil Baytown FCCU3 Reports CO Emissions
NEWS
Group 3 ULSD Basis Plummets 52cts as Sellers Slash Price
Group 3 ultra-low sulfur diesel (ULSD) spot basis plummeted Wednesday (9/9)
to lead Midwest physical weakness, as sellers slashed differentials to clear
barrels amid ample supplies and a sharp rally in distillate futures.
Group 3 ULSD basis fell 52cts on the day to stand at a discount of 50cts
gallon to the October NYMEX ULSD contract. The steep discount reflected a buyer
strike against soaring outright cash prices, forcing heavy discounting in cash
values to move the product, according to market sources.
The October NYMEX ULSD futures contract climbed $0.2332, or 5.1%, on the day
to settle at $4.8010 gallon, the highest since April 28.
While futures were driven higher by global supply tightness, physical buyers
in the Midwest remained on the sidelines, leaving Group 3 differentials to take
the brunt of the market realignment.
"There was determined selling in Group 3, where buyers didn't need the
product," said one Midwest fuels trader.
Unlike Chicago's deep pipeline networks and extensive storage buffers that
absorb screen swings, Group 3 operates as a thinner, inland gathering hub with
far less localized storage. When futures surge, Chicago basis adjusts gradually
because refiners and blenders can easily absorb or store prompt product. Group
3 lacks such flexibility -- without a continuous storage sink for excess
barrels, a single seller needing to move a batch can trigger massive, outsized
swings in differentials when buyers opt to remain on the sidelines when futures
rally.
Reflecting this, across regional pipeline networks, basis adjustments were
far more modest. Chicago ULSD basis weakened by 1 cent to stand at a 2.5cts
gallon discount to the October benchmark.
In eastern pipeline markets, Buckeye Complexand Wolverine ULSD basis
dropped 2cts to a 1 cent gallon discount to October futures.
PADD 2 distillate fuel oil inventories rose by 200,000 bbl to 28.8 million
bbl during the week ended August 28. That was the highest balance for Midwest
distillates since the week ended July 10, when stocks stood at 28.86 million.
API: Crude Stocks Draw by 300,000 Bbl, Gasoline Drops 1.9M
U.S. commercial crude oil stocks decreased by 300,000 bbl during the week
ended September 4, following the 2.6 million bbl draw recorded the previous
week, the American Petroleum Institute (API) reported Wednesday (9/9).
API reported a stockpile decrease of 300,000 bbl at the Cushing, Oklahoma,
delivery point for NYMEX West Texas Intermediate futures, following the 200,000
bbl build reported in the prior week.
Distillate fuel oil inventories rose by 2 million bbl, reversing the 300,000
bbl draw reported the prior week.
Gasoline inventories fell by 1.9 million bbl, following the 300,000 bbl
build recorded in the previous week.
EIA STEO: 2026 Retail Diesel Price Outlook at $5.07 Gallon
The Energy Information Administration raised its retail diesel price outlook
for 2026 in its September Short-Term Energy Outlook (STEO), reflecting the
global supply tightness driven by the Middle East conflict.
The retail diesel price outlook is forecast to average $5.07 gallon in 2026,
up from the $4.85 gallon predicted by the agency in its previous report.
The agency also anticipates U.S. distillate fuel oil inventories to drop
below 100 million bbls in September, remaining below the five-year average low
through 2027.
"Tightness in the global distillate market has raised domestic prices and
incentivized U.S. exporters to increase distillate exports," the EIA's
September STEO report released Wednesday (9/9) said. "We assume global
production of distillate fuel will remain below last year's levels in the
coming months, contributing to low U.S. diesel inventories and high diesel
prices."
The EIA also increased its distillate crack spread expectation to 94cts
gallon for 2026, up from the 84cts gallon forecast in the August STEO report.
For 2027, the crack spread for the same product was projected at 63cts.
EIA: STEO Eyes Brent at $91, WTI at $84.65 in 2026
The Energy Information Administration has raised its crude price forecasts
for 2026 due to supply constraints, the agency's Short-Term Energy Outlook
(STEO) for September showed Wednesday (9/9).
The EIA forecasts the spot price of global crude benchmark Brent to average
$91 bbl in 2026, up from the $86.67 bbl it projected for August.
"Prices remain elevated in response to falling global oil inventories, which
we estimate have decreased by 400 million barrels so far this year," the EIA
said in its September STEO.
For the entire second half of 2026, the EIA expects Brent to average just a
dollar below its calendar year's projection, at around $90 bbl. "We expect
inventories will continue falling through the end of 2026, which will keep
prices near the August monthly average in the coming months."
Spot Brent hovered at just above $100 bbl on Wednesday (9/9), returning to
three-digit levels the first time in nearly seven weeks, as escalations in the
U.S.-Iran war stoked supply fears.
Supply tightness stems from ongoing transit bottlenecks in the Strait of
Hormuz, where maritime threats have severely restricted Persian Gulf crude
exports and forced regional producers to shut upstream production as storage
fills.
The EIA is, however, the agency is more optimistic about supply in the
coming year, projecting an average of $74 bbl for Brent in 2026, as production
and inventories increase.
For U.S. crude, the EIA expects West Texas Intermediate spot prices to
average $84.65 bbl in 2026, up significantly from the $65.40 bbl average
recorded for 2025. By next year though, it expects WTI to retreat to an average
of $69.74 bbl as market conditions stabilize.
The spot price of WTI hovered above $95 bbl on Wednesday.
On the supply front, the EIA projects U.S. crude oil production will average
a record 13.8 million bpd in 2026, up from 13.7 million bpd in 2025. Production
is forecast to expand further in 2027 to average 14.3 million bpd.
EIA: New England NatGas Nears Record Discount to Benchmark
Low-cost regional supplies and declining power sector consumption have
pushed New England natural gas spot prices near record discounts relative to
the Henry Hub benchmark, the U.S. Energy Information Administration (EIA)
reported Wednesday (9/9).
Natural gas prices at Algonquin Citygate averaged $0.43 MMBtu below Henry
Hub from April through July 2026, marking the second-widest discount for the
period since data collection began in 1999, the EIA observed in an analysis.
Expanded pipeline capacity from Appalachia and record Canadian pipeline
imports averaging 0.4 billion cubic feet per day enabled low-cost gas to be
supplied directly into the regional market, the agency noted.
Natural gas demand in New England fell 5% during the same four-month span
compared with 2025 levels, aligning with a 1.1 billion kilowatthours decline in
natural gas-fired electricity generation.
EIA attributed the generation shift to stronger renewable output, with
regional wind power generation surging 59% and utility-scale solar output
rising 29%.
BTS: Freight TSI Drops 2% Y-o-Y in July
The Freight Transportation Services Index fell 2.0% year-on-year in July to
settle at 135.7, Bureau of Transportation Statistics data released Wednesday
(9/9) showed.
On a month-over-month basis, the index dropped 0.7% from June, snapping a
single month of growth. The July 2025 baseline stood at 138.5.
The Freight TSI measures the amount of freight carried by the nation's
for-hire transportation industry.
The monthly decrease was driven by downturns in air freight, pipeline
shipments and trucking volumes. Conversely, rail carloads, rail intermodal and
water transportation posted gains during July.
In broader economic indicators, Federal Reserve Board industrial production
rose 0.2% in July, with manufacturing output also increasing by 0.2%. Mining
output grew 0.2%, while utilities output expanded 0.5% during the month.
Housing starts fell 12.4% in July to 1,239,000 units following a sharp
increase in June. Meanwhile, the Institute for Supply Management Manufacturing
Index rose 2.3 percentage points to 55.6%.
BTS revised the June freight TSI up to 136.6 from the previously reported
134.9 level. The agency scheduled the release of the August 2026 index for
October 14.
U.S. Rack ULSD Hits Nearly $5 gallon, a 91.5% Y-o-Y Rise
U.S. wholesale rack prices for ultra-low sulfur diesel (ULSD) and gasoline
rose Wednesday (9/9), as diesel strengthened across all five PADDs as crude oil
futures surpassed the $100 mark due to mounting Middle East supply concerns.
Nationwide ULSD rack prices averaged $4.9427 gallon, a 2.25cts from the
previous trading session. This was $2.3621, or 91.5%, above the $2.5806 gallon
average from the previous year, according to DTN data.
Wednesday's conventional unleaded gasoline rack price averaged $3.3989
gallon, up 0.75ct from $3.3914 gallon reported Tuesday, it was 31.31cts, or
10.1%, above the August average of $3.0858 gallon and $1.1468, or 50.9%, above
the $2.2521 gallon average from the previous year.
The stronger rack market came as crude futures rallied this morning amid
escalating attacks in the U.S.-Iran conflict raising concerns over crude and
refined-product supply. The front-month ICE Brent futures contract traded above
$100 bbl for the first time in nearly seven weeks.
WTI traded above $95 bbl Wednesday morning and reached a session high of
$96.10 bbl, the highest level since May 22, when the contract traded as high as
$96.60 bbl. The pressure was especially pronounced in diesel as the front-month
NYMEX ULSD traded above $4.70 gallon, up roughly 13cts on the day.
That strength was reflected across regional ULSD racks. Rocky Mountain
values posted the largest advance, rising 2.96cts to $5.0634 gallon, followed
by Gulf Coast prices, which increased 2.90cts to $4.7779 gallon. East Coast
ULSD rose 2.57cts to $4.7486 gallon, Midwest prices increased 2.15cts to
$4.9029 gallon and West Coast values added 0.63ct to $5.5800 gallon.
Relative to the national ULSD rack average of $4.9427 gallon, PADD 5
maintained the widest premium at 63.73cts, followed by PADD 4 at 12.07cts. PADD
1 traded 19.41cts below the national average, PADD 3 held a 16.48cts discount
and PADD 2 stood 3.98cts below the U.S. benchmark.
Gasoline racks were firmer overall despite weaker paper markets. RBOB
futures fell about 5cts to trade above $3.20 gallon, while backwardation
remained above 16cts even after narrowing by roughly 2cts on the day.
Regional gasoline prices were mixed. Rocky Mountain values recorded the
largest increase, rising 5.07cts to $3.8907 gallon, while Midwest gasoline
increased 4.04cts to $3.1969 gallon and Gulf Coast values were nearly unchanged
at $3.2334 gallon. East Coast gasoline fell 1.24cts to $3.2363 gallon, while
West Coast values declined 1.03cts to $4.1139 gallon.
Compared with the national gasoline average of $3.3989 gallon, PADD 5
reported the largest premium at 71.50cts, followed by PADD 4 at 49.18cts. PADD
2 held the widest discount at 20.20cts, while PADD 3 and PADD 1 traded 16.55cts
and 16.26cts below the national average, respectively.
EIA: U.S. Retail Diesel Averages Record High of $5.967 Gal
U.S. pump prices for diesel hit record highs this week, surging 36.8cts to
$5.967 gallon, to eclipse previous historical peaks, Energy Information
Administration (EIA) data showed Tuesday (9/8).
The national retail average for diesel stood $2.201 above year-ago levels
seen, the EIA data for the week ended September 7 showed. In the prior week,
the pump price averaged $5.599 gallon. Its prior record high was $5.81gallon,
achieved on June 20, 2022.
Diesel's largest price increase in the latest week was in the Gulf Coast, or
PADD 3 region, where the pump price climbed 39.4cts to $5.754 gallon. This was
followed by the Midwest, or PADD 2, region which rose 37.5cts to $5.946 gallon.
The Lower Atlantic, or PADD 1C, gained 32.9cts to $5.605 gallon. In the East
Coast, or PADD 1, diesel advanced 29.6cts to $5.744 gallon.
California recorded the highest diesel prices for any U.S. state, soaring
54.6cts on the week to $7.764 gallon. The West Coast, or PADD 5, region climbed
49cts to $6.987 gallon. The Rocky Mountain, or PADD 4, region rose 25cts to
$5.805 gallon.
EIA: U.S. Gasoline Up 8.6cts, Highest Since June
U.S. pump prices for regular gasoline rose 8.6cts to $4.157 gallon during
the week ended September 7, reaching the highest level since June, Energy
Information Administration data showed Wednesday (9/9).
The national average was the highest since the week ended June 8, when
gasoline averaged $4.146 gallon, and stood 96.5cts above levels seen during the
previous year.
The West Coast (PADD 5) posted the largest weekly increase, rising 15.6cts
to $5.362 gallon, while the Central Atlantic (PADD 1B) registered the
second-largest gain, climbing 12.3cts to $4.240 gallon.
East Coast (PADD 1) gasoline prices rose 9.4cts to $4.031 gallon, while New
England (PADD 1A) increased 9.3cts to $4.189 gallon.
The West Coast (PADD 5) remained the most expensive region nationwide at
$5.362 gallon, while the Gulf Coast (PADD 3) continued to post the lowest
gasoline price at $3.685 gallon, up 6.7cts from the previous week.
Oil Back Above $100 BBL Fuels Demand Destruction Woes
Front-month Brent futures on Wednesday (9/9) surpassed the $100 bbl mark for
the first time in nearly seven weeks as recent escalations in the U.S.-Iran war
stoked supply fears. A return of oil prices in the three digits threatens to
slow an already tepid recovery in crude oil demand and may further throttle
refined fuels demand.
Slower economic growth: six months of high energy prices have added to
inflationary pressures and hampered economic growth.
Less appetite for fresh crude: crude imports into China tend to correlate
with price as refiners sit on ample reserves. Both refiners and the state have
built inventories since 2020, together now estimated at more than 1 billion bbl.
Lower fuels consumption: high refined fuels prices have led to a measurable
decline in fuels consumption and accelerated transitions to alternative fuels
sources in many markets. Sinopec's latest report forecasts an 8.7% year-on-year
drop in domestic gasoline consumption, and even steeper decline of more than
11% in diesel demand.
On the flip side, an extended period of high oil prices also incentivizes
more production outside of the Middle East. The supply effect of high prices,
however, usually takes longer to materialize than the price-induced demand
destruction.
In the meantime, the world is once again facing oil supply risks that have
catapulted prices above the $100 bbl mark. This time, however, fuel and crude
inventories are all but depleted in many parts of the globe, thus providing
little cushioning against future disruptions.
ExxonMobil Baytown FCCU3 Reports CO Emissions
ExxonMobil reported an emissions event at its 588,000 bpd Baytown refinery,
the third largest in the United States, after a loss of airflow at the plant's
No. 3 Fluidized Catalytic Cracking Unit's carbon monoxide boiler, a filing with
the Texas Commission on Environmental Quality (TCEQ) said.
The event occurred Tuesday (9/8), between 1:00 a.m. and 3:59 a.m. CT, and
resulted in elevated emissions from the FCCU3 Wet Gas Scrubber, ExxonMobil
reported in a TCEQ filing the same day.
The refinery estimated carbon monoxide emissions at 56,269.77 pounds during
the event. Smaller quantities of particulate matter, sulfuric acid and other
compounds were also reported.
Operators made adjustments to stabilize operations and minimize emissions,
ExxonMobil reported, saying impact to production was minimal and that it
expected to meet contractual commitments.
FCC units are a key part of gasoline production, converting heavier refinery
streams into gasoline blendstocks and other lighter products.
The Baytown refinery produces gasoline, diesel, jet fuel and other petroleum
products.
DTN reached out to ExxonMobil for additional details but did not get an
immediate response.
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