Group 3 ULSD Surges to Trade Nearer to Rest of Midwest


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Group 3 ultra-low sulfur diesel (ULSD) spot basis 
surged Thursday (9/10) to align more closely with the rest of the Midwest, 
after being in steep contrast for two prior days with other regional hubs due 
to price dislocations caused by rallying distillate futures.

   Group 3 ULSD basis gained 45cts on the day to stand at a discount of 5cts 
gallon to the October NYMEX ULSD contract. The upward surge brought the basis 
back into closer territory with major regional pipeline hubs after fell 52cts 
drop on Wednesday (9/9) and a 35cts increase on Tuesday (9/8).

   Across major regional pipeline networks, physical basis adjustments remained 
under modest downward pressure. Chicago ULSD basis weakened by 3cts on the day 
to trade at a 5.5cts gallon discount to October futures.

   In eastern distribution channels, Buckeye Complex and Wolverine ULSD basis 
both dropped 2cts to settle at a 3cts gallon discount to the October NYMEX 
contract.

   The physical cash market alignment developed as benchmark futures continued 
their upward rally. The October NYMEX ULSD futures contract climbed $0.2565, or 
5.34%, on the day to settle at $5.0575 gallon.

   Latest Energy Information Administration (EIA) data showed PADD 2 distillate 
fuel oil inventories drew by 300,000 bbl to 28.5 million bbl during the week 
ended September 4, pulling stocks off their recent seven-week peak.




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