Group 3 Jet Fuel Basis Drops 14cts, Midwest ULSD Softens


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Group 3 jet fuel spot basis faced heavy selling 
pressure Monday (8/31) dropping 14cts against a surging NYMEX ultra-low sulfur 
diesel (ULSD) futures market to lead physical market weakness across the 
Midwest.

   Group 3 jet fuel was talked at a discount of 55cts gallon to the October 
NYMEX ULSD futures contract, widening 14cts on the day. Chicago jet fuel basis, 
meanwhile, held flat at a discount of 65cts gallon to the same benchmark..

   Midwest ULSD basis also faced downward pressure across major trading hubs.

   Prompt Chicago ULSD basis weakened by 2cts to stand at a 16cts gallon 
discount to the October NYMEX ULSD contract. Pipeline spot basis across the 
Buckeye Complex and Wolverine markets followed Chicago lower, each softening by 
0.5cts on the day to a 12.5cts gallon discount to the same benchmark.

   Bucking the broader regional diesel weakness, the Group 3 ULSD discount 
against the NYMEX benchmark narrowed by 1.75cts to 12.75cts gallon. The slight 
physical firming in the Plains came as traders weighed tight localized supply 
against persistent midstream disruptions.

   The underlying paper market provided major tailwinds across physical hubs, 
with front-month NYMEX ULSD advancing 13.86cts to settle at $4.4953 gallon. The 
surge came despite weekly supply figures from the U.S. Energy Information 
Administration, which showed PADD 2 distillate fuel oil inventories rose by 
200,000 bbl to 28.6 million bbl during the week ended August 21.

   Regional jet fuel stocks also expanded, rising by 100,000 bbl on the week to 
reach 8.1 million bbl. That build positions Midwest jet inventories 600,000 bbl 
above year-ago levels.




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