Buckeye/Wolverine ULSD Basis Up 40cts, Hit 1-Mo High


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) - Midwest ultra-low sulfur diesel (ULSD) spot basis 
values surged across regional pipeline networks Wednesday (10/21), reacting to 
the four-month low in distillate stockpiles and operational issues at 
ExxonMobil's 275,000 bpd Joliet refinery.

   Buckeye Complex ULSD and Wolverine ULSD basis posted the largest increases 
in the Midwest distillate market, each rising 40cts on the day to a 40cts 
gallon premium to the November NYMEX ULSD contract from parity in the previous 
trading session. The differentials hit a one-month high, according to DTN data. 

   In Chicago, ULSD basis jumped 46cts to move from a 6cts discount to a 40cts 
gallon premium.

   In the Midcontinent, the basis for Group 3 ULSD widened by 10.5cts to trade 
at a 14.5cts gallon premium over November futures. Group 3 jet fuel (Q grade) 
basis advanced 7.5cts on the day to a 42.5cts gallon premium over futures.

   The physical spot surge was reinforced by Energy Information Administration 
(EIA) data showing PADD 2 distillate inventories drew by 400,000 bbl during the 
week ended October 16 to 25.3 million bbl -- the lowest regional level logged 
since June 5.

   A Midwest trader attributed the broader market tension across regional 
channels to ExxonMobil's report on Wednesday (10/21) of an ongoing process 
upset at the Joliet refinery in Channahon, Illinois. The Will Count plant 
processes crude oil primarily into gasoline and diesel fuel for Midwest markets.

   "I think most of it was spurred on by the Exxon report, and refiners that 
didn't want to be held short," the trader told DTN.

   The rally physical ULSD values was in consonance with the upbeat futures 
market. NYMEX November ULSD futures climbed $0.1688, or 3.54%, to settle at 
$4.9321 gallon, after touching an intraday peak of $4.9467 gallon.




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