By Chris Carter, Senior Manager of Supply
Like all markets, Chicago ULSD Basis has been volatile over the past 3 months. Chicago Basis has traded as low as 30 cents per gallon below Prompt NYMEX HO Futures. Then traded as high as 18 cents per gallon over NYMEX. Chicago refineries are in a unique position compared to surrounding markets. Chicago has the ability to take advantage of the Canadian crude, which trades at a discount to WTI. As a result, this discounted crude improves their refinery margins. Yet as production increases, refiners are restricted on where products can be transported. Unlike other regions, Chicago refiners do not have the ability to easily export. As a result, a lower basis value will help pull demand from surrounding regions.
The Chicago region did experience wet and “cooler” temperatures in March. The cooler temps delayed the normal spring planting demand. Yet, once planting season started, the market experienced refinery hiccups. Toledo BP/Cenovus went down for a planned multi-unit turnaround on May 1st. Additional refineries in the market had refinery issues over the past two months. Those issues combined with Toledo’s planned turnaround had an impact market.