Midwest Jet Fuel Discounts Surge on Week Amid Supply Hike


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The discount for Midwest jet fuel variants against 
NYMEX ultra-low sulfur diesel (ULSD) for July stood Friday (6/5) at between 
25cts and 40cts a gallon wider than a week ago as regional refineries returning 
from spring turnarounds boosted the supply of middle distillates.

   Chicago jet fuel was talked at a discount of 95cts to NYMEX ULSD for July, 
unchanged from Thursday but 40cts higher from May 29.

   The basis for Group 3 jet fuel was heard at a discount of 80cts a gallon to 
July ULSD on Friday, versus Thursday's 90cts, signaling a 10ct contraction on 
the day. But compared to a week ago, the discount was wider by 25cts.

   The U.S. Energy Information Administration reported on Wednesday (6/3) that 
Midwest jet fuel stocks stood at 6.8 million bbl during the week ended May 29, 
up 800,000 bbl from the prior week and 500,000 bbl higher from a year ago.

   Both the Group 3 and Chicago jet fuel markets are heavily dependent on 
regional pipeline scheduling cycles, including the Magellan and Badger 
networks. If shippers cannot secure line space to move product out of 
Midcontinent refining centers or the Chicago terminal hub to downstream 
markets, local spot barrels must be heavily discounted to find immediate buyers 
or storage capacity.

   Furthermore, Midwest aviation demand does not typically face the same 
structural deficit seen on the East Coast, leaving PADD 2 hubs highly 
susceptible to localized oversupply when regional refinery utilization climbs.




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