Chicago ULSD Basis Nearly 6-Mo High on Stocks Drop


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) - The basis for Chicago ultra-low sulfur diesel (ULSD) 
surged 50cts gallon against benchmark futures Wednesday (10/28) amid firm 
demand and a sharp weekly draw in Midwest distillate stocks reported in federal 
data.

   Compared to the Merc level recorded on Tuesday (10/7), the Chicago spot 
contract traded at a 50cts premium -- the highest since May 8, when it was 
50.5cts, according to DTN data.

   In the Midcontinent, Group 3 ULSD advanced 7.25cts on the day to trade at a 
3.75cts gallon premium over November futures.

   "The two aren't moving together as yet," a trader said, referring to the 
lack of pricing sync. "It's all about Chicago, for now."

   Midwest distillate strength was reinforced by Energy Information 
Administration (EIA) data released Wednesday, which showed PADD 2 distillate 
stockpiles drew by 1.1 million bbl during the week ended October 23 to 24.2 
million bbl -- the lowest regional volume logged in five months. Regional jet 
fuel inventories also dropped by 500,000 bbl to 6.8 million bbl.

   Across eastern pipeline channels, Wolverine ULSD basis surged 47cts to a 
50cts gallon premium over November futures, while Buckeye Complex ULSD basis 
rose 37cts to settle at a 40cts gallon premium.

   Regional jet fuel trading showed mixed movements across major hubs. Chicago 
jet fuel basis gained 5cts to settle at a 10cts gallon discount to futures, 
while Group 3 jet fuel basis fell 4cts to trade at a 26cts gallon premium.

   In futures trading, NYMEX November ULSD climbed $0.0400, or 0.84%, to finish 
at $4.8152 gallon after reaching an intraday peak of $4.8573 gallon.




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