Los Angeles ULSD Basis Up 34cts, Hits Over 3-Yr High

MIAMI, FL (DTN) — The basis of  Los Angeles ultra-low sulfur diesel  (ULSD) surged 34 cents on Tuesday (3/24)  reaching a  70cts premium over the May NYMEX RBOB futures contract, its highest level  in over three year,  amid regional strong demand and limited supplies.

The Los Angeles ULSD basis reached a comparable level on October 10, 2022, when it was at a 60cts premium over the front-month NYMEX RBOB futures contract, according to DTN data. It also marks a sharp increase from Monday’s (3/23)  jumped  36cts premium, nearly doubling in just one day.

Since February 27, when the Iran conflict started, to date the basis of ULSD in Los Angeles basis has risen drastically, climbing from a 7cts discount to the same benchmark to its current level, an increase of nearly ninefold.  

Today’s hike was driven by limited supplies supported by Energy Information Administration (EIA) data showing refining utilization in the West Coast, or PADD 5, declining to 79.8% during the week ended March 13, from 83.8% the prior week.

Distillate fuel oil stocks in PADD 5 fell by 500,000 bbl to 11.5 million bbl week-over-week, the EIA data showed. Inventories were also down by 1.1 million bbl compared to last year. Distillate imports, meanwhile, climbed by 13,000 bpd to 33,000 bpd in the respective week and were higher by 19,000 bpd year-over-year.