Midwest ULSD Basis Dip as Markets Shift to Cycle 3


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   Midwest ULSD Eases as Markets Shift to Cycle Three Trade

   DAVENPORT, FL (DTN) -- Midwest ULSD basis fell on Monday (11/17) as values 
in Chicago, Wolverine and Buckeye declined by 21.5cts from Friday and settled 
at a 5.5cts discount to December ULSD futures on the New York Mercantile 
Exchange as the market rolled into Cycle 3.

   This price reversal follows an unexpected increase recorded on Friday 
(11/14) when ULSD traded sharply higher at a 16cts premium to December ULSD, 
reaching a two-year high ahead of the Cycle Two cutoff amid a strong 
backwardation structure.

   However, once the market rolled into Cycle 3 scheduling, "some of that 
premium was expected to come off," one trader familiar with the market said.

   The sharp pullback from Friday to Monday marks the biggest single-day move 
in Chicago ULSD basis in more than two years, with Wolverine and Buckeye 
showing the same day-on-day decline, according to DTN Energy data.

   Indications for the remainder of the week show steady values as market 
participants watch pipeline scheduling and late-month demand for further 
direction.




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