Midwest ULSD Discounts Widen as Futures Rally


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Cash discounts for Midwest ultra-low sulfur diesel 
(ULSD) widened sharply Wednesday (7/8) as surging NYMEX futures stymied 
physical spot market demand.

   In Chicago trade, ULSD was talked at a discount of 48.5cts gallon to August 
futures, widening 6.5cts on the day. On the Wolverine and Buckeye pipelines, 
spot discounts widened 10cts to finish at 45cts gallon below the prompt 
contract.

   Among Group 3 products, the basis for ULSD was cited at a 37.5cts gallon 
futures discount, widening by 10.5cts from the prior session. The weaker 
physical differentials developed despite a sharp crude rally sparked by the 
U.S. canceling its ceasefire agreement with Iran.

   Front-month August NYMEX ULSD futures jumped 36.58cts to settle at $3.6575 
gallon on Wednesday following escalating geopolitical tensions in the Middle 
East that raised concerns about global supply tightness.

   Adding to the downward pressure on Midwest distillates, Energy Information 
Administration data on Wednesday showed PADD 2 distillate inventories rising 
500,000 bbl to 28.3 million bbl during the week ended July 3. Regional imports 
fell 18,000 bpd on the week to cushion the build, although stocks remained 3.7 
million bbl above year-ago levels.




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