Chicago ULSD Basis Up 44cts as Joliet Outages Jolt Market


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Chicago ultra-low sulfur diesel (ULSD) led the rally 
in Midwest distillate markets Thursday (9/17) as mounting disruptions at 
ExxonMobil's Joliet refinery jolted markets already unnerved by physical fuel 
tightness.

   Chicago ULSD basis surged 44cts to a premium of 55cts gallon over October 
NYMEX ULSD. Eastern pipeline networks mirrored the upward momentum, with 
Buckeye Complex ULSD basis advancing 45cts and Wolverine ULSD basis rising 
40cts to match the 55cts premium against the NYMEX benchmark.

   "Joliet is the big issue there for sure," said one Midwest fuels trader, 
adding that supply tightness appears poised to sustain through the current 
trading cycle. "It seems to have some legs here. We're not done with the cycle 
until basically next Thursday, so we've got a whole week to see what happens."

   Floodwater overwhelmed a pump Thursday (9/17) at Joliet refinery in 
Channahon, Illinois, resulting in an oil release into water, a filing with the 
Illinois Emergency Management Agency (IEMA) said. The flooding incident was 
reported just four days after a weekend power outage at the facility that 
triggered a site shutdown and safety flaring.

   The Joliet complex processes heavy Canadian crude oil to produce 
transportation fuels distributed across Midwest markets.

   In the Midcontinent on Thursday, Group 3 ULSD basis edged higher by 5.5cts 
to stand at a premium of 4.5cts gallon against the benchmark contract.

   Aviation fuels also strengthened across the region. Chicago jet fuel basis 
gained 10cts on the day to stand at a 70cts gallon discount to October ULSD 
futures, while Group 3 jet fuel basis rose 13cts to a 77cts gallon discount.

   The rally in Midwest ULSD unfolded despite a latest weekly rise in regional 
distillate inventories. EIA data showed PADD 2 stocks of the product rose 
300,000 bbl during the week ended Sept. 11 to 28.8 million bbl, while jet fuel 
inventories also grew 300,000 bbl to 28.8 million bbl as refinery crude 
utilization slipped 2.6 percentage points to 99%.

   In Thursday's session, October NYMEX ULSD eased 13.26cts, or 2.52%, to 
finish at $5.1139 gallon after bottoming at $5.0046 gallon during the session.

    




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