Midwest Distillate Basis Jumps 8-9cts on Crude Volatility


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Midwest ultra-low sulfur diesel (ULSD) basis 
strengthened Tuesday (3/10) as regional cash markets adjusted following sharp 
volatility across energy futures markets, which has driven wide swings across 
the distillates complex.

   Chicago ULSD basis strengthened 8cts on the session to a 17cts discount to 
April NYMEX ULSD futures, while the same product moving through the Buckeye 
Complex and the Wolverine pipeline strengthened by 9cts to a 16cts discount, 
according to DTN data. In the jet fuel market, Chicago jet fuel strengthened 
9cts to a 16cts discount, while Group 3 jet fuel, commonly referred to as "Q," 
strengthened 15cts to a 35cts discount.

   "Honestly this swing in distillates is mainly a reflection of the wild 
swings in crude oil prices," a source familiar with the Midwest market said. 
"When crude moves aggressively either way, distillate basis tends to adjust as 
the market recalibrates replacement costs and traders reassess near term 
supply."

   The narrowing discounts suggest regional cash markets are reacting to 
broader movements across the crude and ULSD futures markets rather than a 
sudden shift in Midwest supply fundamentals. Sharp swings in those contracts 
often ripple through distillate markets, prompting adjustments in rack and spot 
pricing as traders reposition around rapidly changing flat price levels.




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