Midwest Jet Fuel Discounts Widen on NYMEX ULSD Rally


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Midwest spot jet fuel basis weakened across both 
regional hubs Tuesday (7/21), as expanding cash discounts bucked the upward 
momentum in distillate futures.

   Group 3 jet fuel saw the sharpest basis setback of the day, talked at a 
discount of 25cts gallon to the prompt August NYMEX ultra-low sulfur diesel 
(ULSD) futures contract. The 14ct daily widening fully reversed the prior 
session's basis gains, pointing to localized physical easing across the 
southern Midcontinent.

   Chicago jet fuel also faced widening pressure, talked at an 81cts gallon 
discount to the August NYMEX ULSD contract. The 8ct daily drop marks a second 
consecutive session of widening differentials for the hub, as local spot buyers 
backed off despite strong flat-price support.

   Underlying energy markets drew fresh support from mounting global supply 
risks, with NYMEX ULSD futures edging higher amid escalating threats to 
maritime trade. Geopolitical risks flared following fresh attacks on shipping 
lanes stretching from the Black Sea to the Strait of Hormuz.

   Concurrently, the broader structural deficit in middle distillates continues 
to insulate flat prices. Ukrainian drone strikes targeting Russian refining 
infrastructure have severely constrained Moscow's processing capacity, keeping 
international export flows restricted.

   On the regional front, PADD 2 physical supply flexibility remains tightly 
constrained by the lingering labor dispute at BP's 440,000 bpd Whiting 
facility. The widening cash discounts, however, signal that prompt Midwest jet 
demand is temporarily lagging the aggressive rally in NYMEX futures.

    




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