Chicago Refined Products Continue to Lead Midwest


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Chicago refined products continued to anchor Midwest 
spot pricing through the year, with Wolverine and Buckeye consistently 
following Chicago's direction. Day-to-day moves remained tightly correlated, 
although several supply-side events briefly widened spread across the region, 
according to DTN Energy data.

   The most pronounced gasoline dislocation occurred during the early-spring 
maintenance period, when Chicago CBOB moved to a 4.0cts premium to both 
Wolverine and Buckeye. The peak separation hit on July 7, when Chicago CBOB 
traded at a 10.0cts discount to front-month NYMEX RBOB futures, while both 
Wolverine and Buckeye printed 14.0cts discounts. The move was fueled by BP 
Whiting disruption earlier that week, where flaring and temporary unit rate 
reductions tightened gasoline supply directly into Chicago. Chicago spot values 
firmed immediately on the reduced availability, while pipeline-fed Wolverine 
and Buckeye adjusted more gradually. The premium narrowed back into the typical 
parity and 1ct range once Whiting stabilized. A year earlier, Chicago held a 
0.50cts  premium on the same date.

   Meanwhile, distillates saw a sharper break earlier in the year. On January 
24, Wolverine ULSD weakened significantly, posting a 53.8cts discount to 
front-month NYMEX ULSD futures, while Chicago ULSD settled at a 19.0cts 
discount, leaving Wolverine 35cts weaker than Chicago. Buckeye ULSD printed a 
28.0cts discount, placing it 9cts weaker than Chicago on the same day. At that 
moment, market participants tied the move to localized rack tightness into 
Michigan, weather-related winter diesel demand, and uneven terminal resupply. 
Typically, Chicago--Wolverine ULSD spreads average 1 cent, making the 
late-January divergence one of the most significant of the year.

   Against the futures market, regional structures for the most part reflected 
expected seasonal behavior. CBOB traded between a discount and premium to 
front-month RBOB futures, shaped by Chicago blending economics, refinery 
activity and Midwest demand. ULSD basis likewise traded as either a discount or 
premium to front-month NYMEX ULSD futures, sensitive to PADD 2 rack tightness, 
weather-driven diesel pulls and pipeline timing.

   Latest DTN Energy assessments show a more balanced structure heading into 
late fall. On November 21, Chicago, Wolverine and Buckeye CBOB all traded at a 
22cts discount to front-month RBOB, fully aligned and tighter than the same 
date last year when Chicago carried a firmer differential. ULSD showed a 
similar consolidation: Chicago and Wolverine both settled at a 27.5cts 
discount, while Buckeye traded at a stronger 25.0cts discount, leaving Buckeye 
2.5cts above the other two hubs,  a narrower structure than observed a year 
earlier.

   Looking ahead to December, market participants should expect a stable 
Chicago-led pricing structure. Regional refineries are operating steadily; 
pipelines into Michigan and Ohio are flowing normally, and rack conditions 
appear well-supplied heading into early-winter demand. Any brief widening is 
expected to stem from familiar Midwest catalysts  a Refinery outage, 
cold-weather diesel demand, or temporary pipeline scheduling shifts but nothing 
currently points to a sustained break.

    

    




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