PNW, SF ULSD Basis Climb on Tight Supply

MIAMI, FL (DTN) — Pacific Northwest ultra-low sulfur (ULSD) basis surged by 10cts on Tuesday (3/31) to a 45.5cts premium over May NYMEX ULSD  futures contract, hitting a seven month high on firm buying interest amid supply tightness.

Bids for PNW ULSD basis were heard in the market at a 45ct premium, with no trades confirmed at that level. The assessment was the highest since September 10  when it was at 44.5cts premium over front-month NYMEX ULSD, according to DTN data.

The move was driven by firm demand, with the basis pegged at a 35.5cts premium to May futures contract in the previous trading session on Monday (3/30).

San Francisco ULSD basis also strengthened sharply, climbing by 30cts to a 75ct premium to May ULSD futures. The market was last assessed at a 45ct premium in the prior session on Monday (3/30), reflecting rapidly tightening supply conditions across the West Coast.

Refinery closures are contributing to the tightness in the market, following the shutdown of Valero’s 145,000 bpd Benicia, California,  refinery in late 2005 and the upcoming closure of 139,000 bpd Phillipps 66 Wilmington refinery in April.