MARKETWIRE ALERTS
Barani Krishnan
DTN Refined Fuels Market Reporter
MARKETWIRE ALERTS
MarketWire Afternoon News Sept 24:
Updated at 5:00 PM ET
HEADLINES:
-- Chicago CBOB Basis Dips 4cts as Physical Pressure Mounts
-- Chicago ULSD Basis Extends Decline, Falls 17.5cts
-- Otovo, InCharge Partner on Nationwide EV Charging Services
-- Analysis: Fuel Outages, Harvest Collide in "Wild Midwest"
-- Analysis: Global Diesel Crunch Reprices USGC ULSD
-- EIA: US NatGas Storage Reports 53 Bcf Weekly Injection
-- EPA: Texas Fuel Waiver Not Needed After October 1
-- Industry Warns Diesel Export Ban Could Cut Fuel Output
-- Gasoline Firms as ULSD Racks Slide 18.30cts
NEWS
Chicago CBOB Basis Dips 4cts as Physical Pressure Mounts
Chicago CBOB basis extended its decline Thursday (9/24) for a second
straight day as refinery operations recovered from recent disruptions, raising
expectations for improved supply.
Chicago CBOB basis fell 4cts to a 30cts gallon discount to the October NYMEX
RBOB futures contract from 26cts discount reported Wednesday (9/23), DTN price
data showed.
In contrast, Buckeye Complex CBOB basis held flat at a 25cts discount
against the same benchmark, unchanged from Wednesday's level. Wolverine CBOB
basis slipped 1 cent to a 22cts discount versus the October NYMEX RBOB
contract, compared with a 21cts discount in the prior session.
In the Midcontinent, the Group 3 CBOB basis eased 1.5cts to stand at a
discount of 9cts to the same futures benchmark, compared to Wednesday's 7.5cts
discount.
The cash market weakness for CBOB came as traders weighed operational
progress at regional refining assets against weekly EIA supply data. PADD 2
gasoline stocks fell 500,000 bbl during the week ended September 18 to 43.6
million bbl, while regional gasoline imports decreased by 11,000 bpd to average
7,000 bpd.
NYMEX October RBOB futures contributed to Thursday's spot market weakness,
retreating $0.0218 to end the session at $3.5652 a gallon.
Chicago ULSD Basis Extends Decline, Falls 17.5cts
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.
Otovo, InCharge Partner on Nationwide EV Charging Services
Norway-based Otovo announced Thursday (9/24)a service partnership with Los
Angeles-based InCharge Energy to offer solar, battery storage, and EV charging
equipment across the United States.
Otovo currently services more than 60,000 customers, while InCharge's
InControl software platform supports more than 40,000 EV charging assets,
according to a company statement.
In 2025, InCharge's team resolved about 80% of more than 24,000 charger
support cases remotely, while the InControl platform maintained 99.99% uptime.
The statement said InCharge's broader network extends across every U.S.
state and Canadian province.
Work orders will flow directly between Otovo and InCharge, while Otovo's AI
platform, Endurance, manages intake, dispatch and scheduling.
In the launch markets, each company will resell the other's preventive
maintenance plans while retaining its own customer relationships. The companies
will offer the reciprocal plans at matching prices.
Analysis: Fuel Outages, Harvest Collide in "Wild Midwest"
Sudden supply shocks, pipeline batching delays and thin liquidity have
turned Midwest cash fuel trading into what physical traders are calling the
"Wild West" of U.S. refined products -- a description for the extreme basis
swings that routinely dwarf shifts seen on the Gulf Coast and East Coast.
Differentials against NYMEX futures for fuels in PADD 2 hubs such as
Chicago, Buckeye, Wolverine and Group 3 have shown acute intra-day volatility
in recent weeks. DTN pricing data has logged trading ranges of between 20cts
and 40cts gallon at times in ultra-low sulfur diesel (ULSD) and the
Conventional Blendstock for Oxygenate Blending (CBOB) variant for gasoline.
"The Midwest is truly the Wild West of fuels markets now; it's absolute
volatility across the board," said a regional fuels trader. "We're seeing
spreads shift by several cents in a single window between West Shore, Badger,
and the broader Chicago complex. You're trying to mark basis while balancing
refinery restart timelines against real-time physical demand, and the market is
moving before the ink even dries on a print."
The swings stem from global supply tightness -- particularly in ULSD
following Russian export limits and Middle East trade disruptions -- alongside
domestic operational issues stretching from Illinois into Indiana. Political
rhetoric, including proposals by U.S. President Donald Trump to restrict
domestic diesel exports, has introduced additional uncertainty to regional
markets.
While recent operational outages at ExxonMobil's 275,000 bpd Joliet refinery
and long-running labor negotiations at BP's 440,000 bpd Whiting plant have
heightened supply concerns, the onset of the Midwest harvest season adds
another layer of complexity. Agricultural demand will require significant
volumes of diesel to power farm machinery and transport crops from fields to
market terminals over the coming weeks.
Price roller coaster
DTN pricing data highlights the severe intra-day and intra-month swings
across the region, with Chicago ULSD surging nearly $1.60 a gallon from late
August levels to hit a peak of $5.7078 on September 18 before pulling back
toward $4.6991.
Despite recent pullbacks, monthly averages reflect a severely constrained
market, with Chicago ULSD averaging $4.7980 a gallon in September -- up
81.06cts, or 20.33%, from August.
Current spot prices also remain more than double their year-ago levels, with
Group 3 ULSD assessed Thursday at $4.7766 a gallon, up 109% from $2.2847 a
gallon on September 24, 2025.
The catalyst for the market's most recent turbulence was a September 13
site-wide power outage at the Joliet refinery in Channahon, Illinois, that was
compounded by secondary pump flooding on September 17. The facility, which
accounts for roughly 6% of total Midwest refining capacity and processes 11
million gallons per day of gasoline and diesel, temporarily restricted refined
product flows directly into major Chicago distribution hubs and regional
pipeline networks.
Supply distribution was further complicated by lingering operational
adjustments on the Explorer Pipeline following an August 17 lightning strike
and three-tank fire at its Glenpool, Oklahoma breakout station. While main
trunkline movements across the 1,800-mile system normalized, the temporary
disruption at Glenpool has restricted batch scheduling and cycle timing into
Wood River and Chicago hubs, leaving downstream markets vulnerable to localized
supply squeezes.
Lower refining activity
Refinery utilization across PADD 2 reflects the suddenness of the
disruption. Energy Information Administration (EIA) data shows regional refiner
crude processing dropped from 4.241 million bpd to 3.802 million bpd for the
week ended September 18, pulling utilization down 11.0 percentage points to
89.0%. The sharp drop contributed to a 1.6 million bbl draw in PADD 2
distillate fuel oil inventories to 27.2 million bbl -- the lowest level since
mid-June.
Energy traders are watching whether the market will transition into a calmer
regime in the near term. Physical differentials have already begun to retreat
from peak levels as units at the Joliet complex undergo stabilization and
step-by-step restart procedures, easing immediate spot coverage fears for
regional jobbers.
"Operational problems in PADD 2 couldn't come at a worse time as harvest
demand picks up," John Kilduff, partner at New York energy hedge fund Again
Capital, told DTN. "Between ongoing Russian supply disruptions and escalating
conflict in the Middle East, global markets need every barrel and every drop
right now -- leaving zero room for error in Midwest supply balances."
Analysis: Global Diesel Crunch Reprices USGC ULSD
A global diesel supply crunch has nearly doubled U.S. Gulf Coast ULSD prices
since the Middle East conflict escalated in late February, as reduced supplies
from the Persian Gulf and Russia increased demand for U.S. exports and placed a
higher value on Gulf Coast barrels.
DTN assessed USGC ultra-low sulfur diesel spot price at $4.3391 gallon on
Thursday (9/24), up $2.1031 from $2.2360 on February 27, immediately before the
conflict escalated, according to DTN market data. The increase was even more
pronounced against the previous year, with Thursday's assessment $2.1627, or
99.4%, above the $2.1764 gallon recorded September 24, 2025.
Higher crude prices accounted for only part of that increase. The implied
USGC ULSD crack against West Texas Intermediate crude stood at $87.65 bbl
Thursday, more than triple the $26.89 margin on February 27 and $26.42 on the
comparable day in the previous year. The crack reached a record $106.90 bbl on
September 16, while jet fuel margins have followed a similar path, with the
implied USGC jet crack at $97.10 bbl Thursday compared with $33.72 before the
conflict and $27.57 on September 24, 2025.
The sharp expansion in middle-distillate margins followed disruptions to the
Strait of Hormuz, one of the world's most important petroleum transit routes.
Diesel and gasoil exports from the Middle East averaged only 390,000 bpd in
August, slightly more than one-quarter of pre-conflict levels, as flows through
the Strait remained severely constrained, according to the International Energy
Agency.
The reduction left buyers searching for barrels from other major refining
centers.
External pressure
The loss of Middle Eastern supply has been compounded by reduced Russian
refinery output following repeated Ukrainian attacks on the country's refining
system. Russia has about 6.5 million bpd of installed refining capacity, but
refinery throughput fell to 3.8 million bpd in June, the lowest in more than 20
years and about 30% below the previous year, according to the IEA. Russian
diesel production was also nearly 30% below 2025 levels.
Together, the disruptions have removed a significant amount of diesel from
the international market. Combined Middle Eastern and Russian diesel and gasoil
exports in August were 1.6 million bpd below February levels, when the two
regions accounted for nearly 45% of global seaborne diesel trade, according to
the IEA. Higher refinery runs and exports elsewhere have provided only a
partial replacement for those barrels.
That shortage has increased demand for U.S. refined products. U.S.
distillate exports averaged 1.56 million bpd during the second quarter, 30%
above the five-year average, with shipments increasing to all major export
markets, the Energy Information Administration (EIA) reported. Jet fuel exports
averaged a record 356,000 bpd during the quarter, more than double the
five-year average, with shipments to Europe increasing substantially.
The Gulf Coast supplied most of those additional diesel barrels. PADD 3
distillate exports increased from 1.008 million bpd in February to 1.477
million bpd in May, up 469,000 bpd, or 46.5%. More specifically, exports of
ULSD containing 15 ppm sulfur or less increased 56% over the same period, from
879,000 bpd to 1.371 million bpd, according to EIA data.
Great incentive
Gulf Coast refiners responded to the stronger export demand by maintaining
high operating rates and increasing middle-distillate production. PADD 3
distillate output exceeded 3 million bpd during much of the spring and summer
and stood at 3.051 million bpd during the week ended September 18. Regional
refinery utilization was 96.5%, up from 94% during the comparable week in the
previous year, EIA data shows.
The combination of high refinery runs and strong diesel prices shows
refiners have increased supply while the global market has continued to place a
high value on USGC barrels. That pressure has also been reflected in the NYMEX
ULSD futures curve, where backwardation has maintained a premium for prompt
supply. Front-month ULSD traded 23.23cts gallon above the second-month contract
Thursday, compared with 15.70cts on the comparable day in the previous year,
according to DTN market data.
For that reason, industry participants pushed back on reports that the U.S.
Department of the Treasury was considering a ban on U.S. diesel exports to ease
domestic price pressure, arguing that such a move could force Gulf Coast
refiners to reduce crude runs and ultimately tighten domestic supplies of
diesel, gasoline and jet fuel.
Another disruption added to global supply concerns this month when a
September 11 attack damaged Saudi Arabia's East-West Pipeline, one of the
principal routes available to move Saudi crude to the Red Sea and bypass
Hormuz. Saudi Arabia restarted the pipeline at reduced rates this week,
although full restoration could take six to eight weeks. The pipeline primarily
carries crude, but the disruption temporarily reduced an alternative route
around Hormuz while refiners were already competing for crude and finished
fuels.
USGC diesel prices strengthened sharply during that period. ULSD was
assessed at $4.5768 gallon on September 11 before rising to $4.9840 on
September 16, while the implied USGC diesel crack increased from $92.18 bbl to
a record $106.90 bbl over the same period, according to DTN market data.
Yet, one of the clearest indications that the rise in USGC diesel has not
been driven solely by a local supply shortage can be found in the regional
basis.
USGC ULSD was assessed Thursday at a 39cts gallon discount to NYMEX futures,
slightly wider than the 36cts discount on February 27. Despite that discount,
the outright USGC price has risen 94% and the diesel crack has more than
tripled since the conflict began.
The contrast shows how the global diesel crunch has repriced USGC ULSD. With
Russian refinery output constrained, Middle East diesel exports still sharply
below pre-conflict levels and U.S. Gulf Coast refiners running at higher rates
than the previous year, U.S. exports have become an increasingly important
source of replacement supply.
Until the Middle East conflict and related supply disruptions ease, USGC
diesel prices are likely to remain driven by both regional fundamentals and the
global competition for available middle-distillate barrels.
EIA: US NatGas Storage Reports 53 Bcf Weekly Injection
Energy Information Administration data released midmorning Thursday (9/24)
show a 53 billion cubic feet injection into U.S. natural gas storage to 3.351
trillion cubic feet in the week ended September 18.
Natural gas in U.S. storage is 4.2% lower than last year and 2.9% above the
five-year average of 3.256 Tcf.
Regionally, EIA reports the East registered a 20 Bcf injection to 815 Bcf,
1.5% more than a year ago and 5.2% higher than the five-year average.
Natural gas in storage in the Midwest increased 25 Bcf week-on-week to 959
Bcf, a 1.9% surplus compared to the same week a year ago and 3.5% higher than
the five-year average.
Mountain region natural gas in storage increased 3 Bcf, down 7.9%
year-on-year to 7% above the five-year average.
South Central storage rose 2 Bcf to 1041 Bcf, 12.4% less than in the same
week last year and 1.7% below the five-year average.
EPA: Texas Fuel Waiver Not Needed After October 1
No additional federal waiver of Texas gasoline requirements will be needed
after October 1 because the state's summertime fuel-control season ends on that
date, the Environmental Protection Agency told DTN Thursday (9/24).
"The Texas summertime gasoline fuel control season ends on October 1, 2026,"
EPA said to DTN in an email. "This means that any additional waivers would not
be necessary since there are not similar wintertime controls that apply."
EPA said summertime gasoline has lower volatility requirements designed to
limit evaporative emissions and smog formation, while similar seasonal gasoline
volatility standards do not apply during the cooler winter months.
After consulting with the Department of Energy (DOE), the agency extended
the Texas waiver on September 8 to help boost gasoline supplies by allowing an
earlier shift away from stricter summertime fuel specifications.
DOE estimated EPA's action to end summertime gasoline standards early
increased gasoline supplies nationwide by hundreds of thousands of barrels per
day, according to the agency email to DTN.
On August 20, the agency announced that beginning September 1, it would
waive federal gasoline volatility requirements and allow wintertime gasoline
specifications to enter the market ahead of the normal seasonal transition. The
action also provided relief from certain state-level boutique gasoline
requirements.
However, the Texas waiver was extended through October 1, coinciding with
the end of the state's summertime gasoline fuel-control season.
Industry Warns Diesel Export Ban Could Cut Fuel Output
More than 30 U.S. energy, manufacturing and business groups are urging the
Trump administration to reject restrictions on diesel exports, warning the
measure could force Gulf Coast refiners to reduce crude runs and ultimately
tighten domestic supplies of diesel, gasoline and jet fuel.
The groups, including the American Petroleum Institute, American Fuel &
Petrochemical Manufacturers and U.S. Chamber of Commerce, sent a letter to
President Donald Trump Wednesday (9/23) opposing proposals to ban or restrict
exports of diesel and other refined products.
The groups said restricting exports could leave excess diesel on the U.S.
Gulf Coast, where refining capacity is concentrated and refiners produce more
diesel than the region consumes. Pipeline and other infrastructure limitations
prevent all of those surplus barrels from being redirected to fuel-deficit
regions such as the East Coast.
API estimates roughly 54% of U.S. refining capacity is concentrated along
the Gulf Coast. The trade group said exports provide an outlet that allows
those refineries to maintain high operating rates.
If diesel exports were restricted, API said Gulf Coast inventories could
build as refiners lose access to overseas markets. Once available storage
becomes constrained, refiners could be forced to process less crude.
Lower refinery runs would also reduce gasoline and jet fuel production
because refiners produce multiple petroleum products simultaneously and have
limited ability to produce only one fuel.
Latest government data underscore the Gulf Coast's role in U.S. distillate
production. PADD 3 refiners produced 3.051 million bpd of distillate fuel
during the week ended September 18, up 27,000 bpd from the previous week, the
Energy Information Administration reported Wednesday.
Gulf Coast distillate inventories increased by 642,000 bbl during the week
to 44.4 million bbl, while PADD 3 refinery utilization remained elevated at
96.5%.
U.S. distillate exports, meanwhile, fell 283,000 bpd to 1.331 million bpd
during the week ended September 18, down from 1.614 million bpd the previous
week, according to EIA.
API estimates the United States normally supplies about 1.5 million bpd of
the roughly 8 million bpd of diesel traded globally by sea. The group said
removing those barrels from the international market could further tighten
global diesel supplies and ultimately put additional upward pressure on U.S.
prices.
Gasoline Firms as ULSD Racks Slide 18.30cts
U.S. wholesale rack markets diverged Thursday (9/24), with conventional
gasoline prices rising nationally while ultra-low sulfur diesel (ULSD) fell
across all five PADDs despite firmer crude oil and refined-product futures.
Nationwide ULSD rack prices averaged $5.1028 gallon, down 18.30cts from the
previous trading session's $5.2857 gallon, according to DTN data.
Conventional unleaded gasoline rack prices averaged $3.6113 gallon, up
4.69cts from the previous day's $3.5644 gallon.
The split in rack prices came as crude oil extended gains Thursday, with
markets seeing little evidence of meaningful progress toward a diplomatic
resolution in U.S.-Iran talks. NYMEX WTI traded near $93.73 bbl, up $1.57 on
the day.
Downstream futures were also firmer. Front-month New York Harbor ULSD rose
2.13cts to $4.7977 gallon, while RBOB gasoline increased 1.42cts to $3.6012
gallon.
Refining margins weakened despite the higher product futures. The diesel
crack fell $0.88 to about $107.83 bbl, while the gasoline crack declined $1.15
to around $57.29 bbl.
ULSD racks fell across all five PADDs. Midwest values posted the largest
decline, dropping 26.20cts to $5.1070 gallon, followed by Gulf Coast prices,
which fell 20.62cts to $4.9547 gallon. West Coast ULSD declined 19.45cts to
$5.5994 gallon, Rocky Mountain values fell 15.21cts to $5.3927 gallon and East
Coast prices dropped 10.11cts to $4.9062 gallon.
PADD 5 maintained the widest ULSD premium to the national average at
49.66cts, while PADD 1 held the largest discount at 19.66cts.
Gasoline racks were mixed regionally despite the higher national average.
East Coast values posted the largest increase, rising 7.72cts to $3.4444
gallon, followed by West Coast prices, which gained 7.22cts to $4.3932 gallon.
Gulf Coast gasoline rose 7.09cts to $3.4659 gallon, while Midwest values fell
1.57cts to $3.3573 gallon and Rocky Mountain prices declined 2.00cts to $4.0835
gallon.
PADD 5 maintained the largest gasoline premium to the national average at
78.19cts, while PADD 2 held the widest discount at 25.40cts.
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