Midwest Fuel Discounts Deepen in January Despite Cold

DAVENPORT, FL (DTN) –– Midwest distillate and gasoline markets traded at deep discounts to front-month NYMEX futures in January, as ample inventories helped offset refinery disruptions and spikes in heating demand caused by freezing weather across the region.

According to DTN data, Chicago ULSD posted the widest average discount among Midwest products during January, trading at an average 31cts discount to front-month NYMEX ULSD, or 3cts wider than the January 2025 discount.

Group 3 ULSD followed, averaging a 28cts discount, which was 8cts wider than a year earlier.

While Chicago ULSD posted the largest absolute discount, Group 3 differentials weakened through January from softer downstream demand and ample supply that pressured prices. Chicago, in contrast, benefitted as the Midwest benchmark, with steadier demand and more distribution outlets.

Among other products, Chicago jet fuel averaged a 27cts discount, wider by 2cts on the year. The discount on Group 3 jet fuel averaged a 23cts, narrower by 7cts.

In Midwest gasoline, Group 3 suboctane gasoline (V) averaged an 18cts discount to front-month NYMEX RBOB, while Chicago CBOB averaged a 19cts discount – widening by 14cts and 11cts, respectively.

Supplies remained sufficient even with disruptions reported at ExxonMobil’s 275,000-bpd Joliet refinery in Channahon and Citgo’s 183,000-bpd Lemont refinery.

Midwest gasoline inventories stood at 60 million bbl into the third week of January, 3.9 million bbl above the same period of last year, while jet fuel stocks rose 400,000 bbl to 7.8 million bbl. While distillate balances fell 2.6 million bbl to 32 million bbl in the same period, stocks were still considered elevated, limiting price support.

Higher inventory trends and seasonally lower winter demand are expected to persist into February, keeping a lid on prices though major refinery outages and cold weather could change this.