Midwest Gasoline Basis Dips on Cycle Shift, Stock Build


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- The basis for Midwest refined products moved lower 
Wednesday (2/25) as the market transitioned from Cycle 3 to Cycle 1 scheduling, 
which marked the completion of trading for fuel scheduled for current-month 
delivery.

   Chicago CBOB basis was assessed at a 34cts discount to April RBOB futures, 
down 10.5cts from the prior session. At Buckeye and Wolverine, CBOB 
differentials were marked at a 35cts discount to the April RBOB contract, each 
falling 11.5cts day on day, DTN Energy data showed.

   In distillates, Chicago ULSD basis was assessed at an 11.25cts discount to 
April ULSD futures, improving 13.75cts from Tuesday. Buckeye and Wolverine ULSD 
were each marked at a 7.25cts discount to the April ULSD contract, 
strengthening 13.25cts on the session.

   Chicago jet fuel was assessed at a 21cts discount to April ULSD futures, 
narrowing 14cts from the previous session.

   The shift in discounts came as the benchmark for NYMEX ULSD and RBOB futures 
both transitioned from March to April.

   Gasoline posted the sharpest day-on-day decline following a fresh inventory 
build in PADD 2. This occurred as traders adjusted positions for the spring 
delivery cycle.

   Traders said Wednesday's price moves reflected the shift in pipeline cycle 
and the rollover to the April futures contract, which reset differentials 
across the complex as liquidity moved into Cycle 1 trading.

   "The discount was more pronounced on gasoline, especially with today's 
inventory numbers," a source familiar with the Midwest market said, noting that 
the cycle shift amplified the move as positions were adjusted into the new 
cycle.

   Supporting that view, motor gasoline inventories in Midwest PADD 2 increased 
by 300,000 bbl to 61.1 million bbl in the week ended February 21, according to 
U.S. Energy Information Administration data released Wednesday (2/25).

   The build in Midwest gasoline stocks left inventories near a two-year high, 
just below the 61.6 million bbl recorded in the week ended February 2, 2024, 
and 900,000 bbl above the 60.2 million bbl reported in the corresponding week 
last year, EIA data showed.

   Market participants will continue monitoring early Cycle 1 nominations and 
end-of-month positioning for further direction in Midwest basis values.




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