Chicago ULSD Basis Extends Decline, Falls 17.5cts


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The basis for Chicago ultra-low sulfur diesel (ULSD) 
plunged 17.5cts gallon against the futures benchmark Thursday (9/24), extending 
cash price weakness for fuels in the region amid talk of better product 
availability.

   Sliding futures values for diesel -- despite Midwest distillate inventories 
standing at a three-month low last week -- also weighed on physical markets.

   The 17.5cts slide in the differential for Chicago ULSD versus October NYMEX 
ULSD left the cash price at a discount of 22cts gallon against the benchmark, 
DTN price data showed. On Wednesday (9/23), the discount was 5cts.

   The basis for Buckeye and Wolverine pipe ULSD fell 15.5cts each to a 18.5cts 
discount to the October NYMEX ULSD futures contract, compared to a 3cts 
discount reported in the prior trading session.

   In the Midcontinent, Group 3 ULSD basis slipped 2.5cts to a discount of 6cts 
to the same benchmark.

   Meanwhile, Chicago jet fuel basis fell 5cts, widening to a 45cts discount to 
the NYMEX ULSD for October delivery from a 40cts discount seen the prior 
session. Group 3 jet fuel basis tumbled 25cts to a discount of 65cts to the 
same benchmark, compared to  Wednesday's 40cts discount.

   The downward momentum in distillate values came amid market chatter that 
ExxonMobil's 275,000 bpd Joliet refinery in Channahon, Illinois had begun 
bringing processing units back online after back-to-back power outage and 
flooding disruptions.

   The operational progress outweighed tightening inventory fundamentals 
reported by the Energy Information Administration (EIA) on Wednesday.

   Midwest distillate stocks fell 1.6 million bbl during the week ended 
September 18 to 27.2 million bbl -- the lowest level since mid-June. The stock 
draw was driven by a sharp 11 percentage-point drop in PADD 2 refinery crude 
utilization to 89%, as crude throughput fell to 3.802 million bpd. Regional jet 
fuel inventories held flat on the week at 8 million bbl.




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