Midwest Jet Fuel Discounts Stay Diverged on Supply Shift


   
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 remained in divergence on Tuesday 
(6/9) as regional supply pressures shifted.

   Market participants noted that Chicago differentials weakened by 10cts while 
Group 3 basis barrels strengthened by 10cts.

   Chicago jet fuel was talked at a discount of 80cts to NYMEX ULSD for July, 
expanding from Monday's assessment of 70cts. Meanwhile, the basis for Group 3 
jet fuel was heard at a narrower discount of 75cts a gallon to July ULSD, 
recovering from Monday's 85cts.

   Pipeline scheduling windows across the Magellan and Badger systems continue 
to aggressively drive spot market valuations for Midcontinent product. Shippers 
unable to secure immediate line space are forced to heavily discount local 
barrels to find instant buyers or open storage.

   Unlike the Chicago market, which relies on nearby Great Lakes distribution 
networks, Group 3 pricing is uniquely captive to the sprawling Magellan system, 
making its basis highly sensitive to pipeline scheduling bottlenecks and 
Oklahoma storage capacity.

   The vulnerability to regional gluts is magnified during peak refinery runs 
because the Midwest lacks the structural aviation demand deficit that supports 
East Coast prices.

   Reflecting supply pressures, Energy Information Administration data showed 
Midwest jet fuel inventories building by 800,000 bbl weekly and 500,000 bbl 
annually to reach 6.8 million bbl during the week ended May 29.




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