ULSD Basis Jumps on Strong Harvest Demand
October 19, 2023
WTI crude oil is a little softer today on the news that the US and Venezuela have agreed that the US can license more companies to do business in Venezuela which will help oil flows. Of course, with all the other uncertainties in the Middle East the downside is limited.
The US crude oil exports jumped last week to 5.301 million barrel per day, with YTD exports running 1.250 million bpd above the prior year.
The DOE inventory report had crude oil stocks down 4.49 million barrels, gasoline down 2.37 million barrels and distillates down 3.19 million barrels.
Propane inventories were up 806,000 barrels to a total of 102.320 million barrels, 16.356 million more barrels than last year.
Diesel barrels are still tight and good demand keeps that market on edge. Group ULSD basis jumped big yesterday as harvest and post-harvest demand continues to be strong.
I have heard some rumblings about refinery shutdowns or issues that might start to clear up the huge discount on Chicago barrels. The explorer pipeline supposedly has no diesel barrels in the system to ship north. Those barrels are being moved into Magellan to try and capture a little bit of money instead of losing $1.00 per gallon shipping to the St Louis- Chicago markets. This will not happen overnight but at least it appears the markets are beginning to correct themselves.
Only two days left to contract fuel and the first month be November. On the 21st the first month will be December.