Midwest Distillates Ease as Gasoline Strengthens


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

   DAVENPORT, FL (DTN) -- Midwest distillate basis weakened Wednesday as 
ultra-low sulfur diesel (ULSD) and jet fuel values dropped across most 
pipelines while gasoline continued strengthening, signaling what could be an 
early seasonal shift in demand heading into the summer driving season.

   Chicago ULSD basis was assessed at a 23.50cts discount to July NYMEX ULSD 
futures contract, weakening 7.50cts on the session. ULSD at Buckeye and 
Wolverine pipeline systems was assessed at a 10cts discount to the same 
benchmark, both easing 10cts from the prior session, according to DTN data.

   Chicago jet fuel basis also weakened to a 65cts discount to July NYMEX ULSD 
futures, down 13cts from the prior session.

   Meanwhile, Chicago CBOB basis strengthened to a 10cts discount to July NYMEX 
RBOB futures, rising 8cts on the day. Buckeye and Wolverine CBOB followed the 
same direction; both assessed a 6cts discount below the same benchmark after 
moving 8cts higher, according to DTN data.

   Group 3 ULSD, commonly referred to as "X," moved in the opposite direction 
from Midwest pipes, strengthening 2cts to a 24.50cts discount to July NYMEX 
ULSD futures. Group 3 jet fuel, known as "Q," also reversed lower, assessed at 
a 75cts discount after weakening 10cts from the prior session. Group 3 
gasoline, commonly referred to as V grade, followed the direction of Chicago, 
Buckeye and Wolverine and was assessed at a 17cts premium, strengthening 3cts, 
according to DTN data.

   "There were a lot of the bigger players selling distillates today and not 
many buyers in the market," a source familiar with Midwest refined product 
trading said. "As we head into driving season, it feels like some of the focus 
is starting to rotate out of distillates and into gasoline."

   The diverging moves between distillates and gasoline suggest participants 
may be beginning to reposition seasonally, with gasoline basis strengthening 
while distillates continue to ease.




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