Chicago Jet Discount Widens 15cts as NYMEX ULSD Jumps


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Jet fuel weakened in Chicago trading Monday (7/20) 
while strengthening in the Group 3 complex, as varying local demand and rising 
futures led to contrasting performances for Midwest jet fuel differentials. 

   Chicago jet fuel was heard talked at a discount of 73cts gallon to the 
prompt August NYMEX ultra-low sulfur diesel (ULSD) futures contract, widening 
15cts on the day. The larger discount indicates localized supply relief or 
shifting spot buyer interest in the Chicago hub, despite strong upward pressure 
in energy futures.

   Group 3 jet fuel was talked at a discount of 11cts gallon to the August 
NYMEX ULSD futures contract. The basis narrowed 4cts on the day, reflecting 
much tighter physical conditions across the southern tier of the Midcontinent 
distribution grid.

   The underlying support for both regional markets stems from a major global 
middle distillate squeeze forced by the Russia-Ukraine war, which has seen 
critical refining capacity sidelined by targeted attacks.

   This international fuel deficit is further exacerbated by the ongoing 
closure of the Strait of Hormuz amid escalating U.S.-Iran hostilities, choking 
off key product exports from the Middle East.

   On the domestic front, these structural geopolitical pressures collide 
directly with highly constrained processing flexibility within the PADD 2 
region.

   Total U.S. distillate inventories remain structurally thin, while localized 
physical output is capped by the lingering salaried-management operations at 
BP's 440,000 bpd Whiting refinery during the United Steelworkers labor impasse.




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