Midwest CBOB Basis Slides as Market Rolls Into New Cycle


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Chicago CBOB basis weakened Monday (6/15), with 
declines extending across Wolverine and Buckeye delivery points against July 
NYMEX RBOB futures as the market moved into a new trading cycle (C3).

   Chicago CBOB basis for West Shore was assessed at a 13.50cts discount to 
July NYMEX RBOB futures, weakening 18.50cts from the prior session, according 
to DTN Energy data. Buckeye CBOB basis was assessed at a 10cts discount, down 
11cts from the previous day, while Wolverine CBOB basis was also assessed at a 
10cts discount, weakening 15cts on the session.

   "After the big drop in RBOB futures today and the uptrend we saw in CBOB 
basis over the last two sessions, expectations were for basis to continue 
moving higher," a source familiar with Midwest refined product trading said. 
"Instead, with the start of the new cycle, refiners appeared to move early to 
place barrels and became more aggressive sellers, which is not unusual during 
the initial days of a new cycle."

   Latest EIA data showed Midwest gasoline inventories increased by 1.1 million 
bbl to 44.4 million bbl during the week ended June 5, recovering from 
multi-year lows recorded the prior week. Even with the build, PADD 2 gasoline 
inventories remained 3 million bbl below the same week last year.

   In futures markets, July RBOB gasoline settled at $2.9472 gallon, down 
8.43cts, or 2.83%, on the session.

   The move lower in Midwest gasoline basis suggests the cycle reset added 
prompt supply into the market, offsetting support that normally comes from a 
weaker futures market.

    




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