Midwest Jet Fuel Basis Slips After Modest Inventory Drop


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The basis for Chicago and Group 3 jet fuel weakened on 
Wednesday (5/13) as federal data showing a modest decline in regional 
inventories widened the product's discount against NYMEX ultra-low sulfur 
diesel (ULSD).

   Chicago jet fuel was at a discount of 20cts a gallon to June ULSD futures 
after a 15cts decline on the day from Tuesday's differential of 5cts.

   The basis for Group 3 jet fuel widened by a negative18cts gallon to bring 
its discount against the front-month ULSD contract to 25cts, from a prior 7cts.

   For Midwest ULSD itself, the basis for Chicago flipped from a prior premium 
of 5cts to a discount of 1cts, registering a negative move of 5cts on the day.  
Group 3 ULSD went from parity against NYMEX ULSD to a discount of 1cts.

   Midwest distillate differentials saw large fluctuations over the past week 
as refiners initially held to inventory on concerns of a supply squeeze, before 
releasing them, resulting in price swings. On Tuesday (5/12) morning, Chicago 
ULSD was at a premium of 97.5cts gallon before giving back 85cts of that later 
in the session.

   The latest weakening in ULSD and jet fuel differentials came after weekly 
inventory data reported by the U.S. Energy Information Administration (EIA) on 
Wednesday.

   Jet fuel inventories in the Midwest dipped by 200,000 bbl last week to 7 
million bbl and were above the 7.1 million bbl recorded in the same week last 
year, the EIA said.

   Distillate fuel oil inventories in PADD 2 dropped by 700,000 bbl on the week 
to 24.2 million bbl while remaining above the 23.8 million bbl reported in the 
same week of the previous year.

    




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