Midwest ULSD Discounts Narrow on Renewed Iran Attack


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Midwest ultra-low sulfur diesel (ULSD) basis 
differentials narrowed Thursday (6/25), aligning with rallying NYMEX futures, 
after an Iranian attack on a cargo ship in the Strait of Hormuz reignited 
geopolitical risk premiums.

   Chicago ULSD was talked at a discount of 27cts gallon to the August NYMEX 
ULSD contract, narrowing by 14cts on the day. This rebound erased a significant 
portion of Wednesday's slide, snapping the downward pressure caused by regional 
inventory builds.

   Wolverine and Buckeye Complex ULSD values strengthened alongside Chicago 
spot prices. Buckeye/Wolverine ULSD was talked at a discount of 24cts gallon to 
the August NYMEX ULSD contract, narrowing by 11cts on the day.

   The turnaround across Midwest ULSD came after the rally in August NYMEX 
ULSD, which rose almost 4% on the day after the Iranian strike on a 
Singapore-flagged vessel off Oman raised concerns about Middle East peace 
initiatives.

   The basis strength bypassed localized fundamentals, which had previously 
weighed on regional fuel values after a 900,000 bbl build in PADD 2 distillate 
inventories reported for the week ended June 19 by the U.S. Energy Information 
Administration.

    




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