PNW Sub Oct Reg Basis Jumps on Tight Supply, Flaring

MIAMI, FL (DTN) – Pacific Northwest Sub Octane distillate basis values surged Tuesday (5/26) as ongoing refinery disruptions, flaring activity and tightening regional supply conditions lifted bids sharply higher across the market.

PNW Sub Octane Regular basis climbed by 20cts on the day after bids were heard at 24cts, 30cts and last at a 36cts premium to July NYMEX ULSD futures, lifting the current market value to a 36cts premium from Monday’s last pegged level of 16.5cts, according to DTN data.

PNW Sub Octane Premium basis also strengthened sharply after a bid was heard at a 60cts premium to July NYMEX ULSD futures, moving the current basis value to 60.5cts. The move represented a 17.5cts increase from Monday’s previously pegged level.

The rally came as supply concerns continued to tighten distillate markets across the U.S. West Coast. Market participants have been monitoring recurring refinery operational issues and flaring activity in California, including recent events at PBF Energy’s Torrance refinery and Marathon’s Los Angeles refinery, which have contributed to tighter product availability.

Structural refining capacity losses also continued supporting the market. Valero has been idling its 145,000 bpd Benicia refinery this year, while Phillips 66 is preparing to shut its 139,000 bpd Wilmington refinery. The closures have reduced regional fuel production capacity and increased dependence on imported barrels across the West Coast and Pacific Northwest.