Chicago ULSD Basis Plunges 34.5cts, Bucking Inventory Drop


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The basis for Chicago ultra-low sulfur diesel (ULSD) 
plunged 34.5cts gallon against the NYMEX benchmark Wednesday (9/23), defying a 
regional inventory drop that took Midwest distillate stockpiles to a 
three-month low.

   The differential for Chicago ULSD versus October NYMEX ULSD slid by 34.5cts, 
reaching a discount of 4.5cts against the benchmark, versus a premium of 30cts 
on Tuesday (9/22), DTN price data showed.

   The basis for Buckeye and Wolverine pipe ULSD fell 38.0cts each to a 
discount of 3cts from a prior premium of 35cts.

   In the Midcontinent, Group 3 ULSD basis slipped 9cts to stand at a discount 
of 3.5cts.

   NYMEX October ULSD itself eased 11.39cts to settle at $4.7764 gallon after a 
White House official said the U.S. had decided not to proceed with a diesel 
export ban proposed by President Donald Trump to help lower domestic prices.

   The steep decline in Midwest ULSD differentials countered Wednesday's strong 
support for aviation fuel in the region.

   The basis for Chicago jet fuel surged 30cts, narrowing to 40cts its prior 
discount of 70cts. Group 3 jet fuel rose 25cts in value to also stand at a 
discount of 40cts.

   "Another wild day in the Midwest," a regional fuels trader said, noting that 
the diverging trends across the distillates landscape came amid talk of 
improving product availability. The shift follows recent supply strains caused 
by a power outage and flooding at the 275,000 bpd Joliet refinery in Channahon, 
Illinois.

   The cash market weakness for ULSD came despite a tumble in regional 
distillate inventories reported by the U.S. Energy Information Administration 
(EIA).

   PADD 2 distillate stocks fell 1.6 million bbl to 27.2 million bbl during the 
week ended September 18, touching their lowest levels since mid-June, the EIA 
data showed. The draw came as regional refinery crude utilization plunged 11 
percentage points to 89%.

    




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