Chicago Jet Fuel Premium Strong After BP Whiting’s Restart

DAVENPORT, FL (DTN) – Chicago jet fuel basis drew strong premium pricing against benchmark distillate futures on Monday (10/27), supported by lingering supply tightness after a brief outage reported last week at BP’s Whiting, Indiana refinery.

Jet fuel basis in Chicago strengthened to a 55cts premium to December NYMEX ULSD futures. That was 57cts higher than the negative 2cts differential from a year ago, DTN Energy data showed.

Market participants said strength in the jet market also contrasted sharply with weaker gasoline differentials across the Midwest.

The spike in Chicago jet fuel differentials followed a power outage that prompted a temporary evacuation at BP’s 435,000-bpd Whiting refinery, the Midwest’s largest, on Friday (10/24). BP said power was quickly restored, and the plant resumed work without any impact to operations or staff safety.

A trader familiar with the Midwest refined products market said the disruption at Whiting created a market anomaly where jet fuel prices remained strong while gasoline weakened —  a dynamic that made sense because the units producing jet fuel were the most affected by the outage.

“Although BP Whiting has resumed operations, it takes time for the refinery to reach full capacity,” the trader said. “In the meantime, it appears BP continues to cover supply obligations through the spot market.”

Prior to Friday, BP had experienced multiple unit shutdowns at Whiting on October 16.

Jet fuel had been trading at an 11cts discount before that incident. In contrast, Chicago CBOB gasoline basis settled on Monday at an 8.5cts discount to front-month futures of RBOB on NYMEX. That was just 2cts lower than the discount seen a year ago.