Chicago and Group 3 cash differentials for ultra low sulfur diesel both decreased Friday due to low demand amid high refiner selling, according to Midwest market sources.
Chicago ULSD weakened by 5.75 cents/gal to an assessment of NYMEX August heating oil futures plus 2.25 cents/gal after a deal for ULSD off of the Wolverine pipeline was heard done at plus 3.00 cents/gal and rebid at that level late in the day, and the generic barrels were at a 1 cent/gal discount to Wolverine barrels.
The Chicago distillate dropped due to increased supplies from a regional refiner, Chicago market sources said.
Group 3 ULSD narrowed by 2.95 cents/gal to be assessed at The NYMEX August heating oil contract plus 12.15 cents/gal, after a deal was heard done late in the day at plus 12.25 cents/gal, and the assessment reflects 10 point-per-day backwardation in the market.
Platts on Friday assessed the NYMEX August heating oil contract at 3:15 p.m. EDT at $2.7946/gal. The heating oil contract settled at $2.7882/gal.
Current low demand for ULSD between the harvest seasons in Group 3 caused the distillate to weaken, a Group 3 trader said.
"We're between the wheat and the corn and soy bean harvest right now," he said. "So agriculture demand has slowed to normal levels and inventories are catching up with demand."
