Chicago ULSD Basis Up 6.5cts, Rallying with Futures


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Midwest ULSD spot basis widened 6.5cts on Tuesday 
(9/29) tracking a rally in futures contract, amid ample supply and firm demand 
fundamentals.

   Chicago ULSD basis was assessed at a 5cts gallon premium above the October 
NYMEX ULSD contract, reversing from Monday's 1.5cts gallon discount.

   Buckeye Complex and Wolverine ULSD basis both were assessed at an 8cts 
gallon premium to October futures contract.

   In contrast, Group 3 ULSD basis plunged 16cts on the day to a15cts gallon 
discount to the same benchmark, shifting from a 1 cent premium reported the 
prior trading session. 

   Aviation fuels showed mixed performance across the complex. Group 3 jet fuel 
basis narrowed its discount by 6cts to a 44cts gallon discount to the 
front-month NYMEX ULSD futures contract, while Chicago jet fuel basis held flat 
at a 40cts gallon discount.

   Physical distillate gains were underpinned by strong underlying futures 
support. NYMEX October ULSD futures climbed $0.1426, or 3.00%, to settle at 
$4.8979 gallon, after reaching a session high of $4.9150 gallon.

   The physical basis firming comes against a backdrop of tightening regional 
supply. Energy Information Administration data showed PADD 2 distillate fuel 
oil inventories dropped by 1.6 million bbl to 27.2 million bbl for the week 
ended September 18, reaching their lowest level since mid-June.

   The sharp draw coincided with a drop in regional refining activity, as 
Midwest refiner crude utilization plunged 11 percentage points on the week to 
89%, with crude inputs falling 439,000 bpd to average 3.802 million bpd.




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