US Midwest ULSD benchmark differential posts biggest 1-day gain since fall 2023

The Group 3 X-grade ULSD differential, assessed in Tulsa, Oklahoma, rebounded 14.75 cents/gal during the Nov. 6 session, following a sharp selloff in the prior two sessions, marking the biggest one-day gain since Oct. 19, 2023, Platts pricing data shows. Market participants cited multiple factors for the swift price action, including strong backwardation in the NYMEX ULSD futures, the closing of the harvest season amid a lack of data due to the US government shutdown, and a sharp draw on inventories in the region. Over the past week, the backwardation in the futures market has intensified, settling at nearly 6 cents/gal between the December Mo1 and January Mo2 contracts Nov. 6. Platts data shows the Mo1-Mo2 backwardation was below 2 cents/gal as recently as Oct. 16, but from Nov. 3 to Nov. 6, the spread widened from 2.98 cents/gal to 5.94 cents/gal. “The backwardation in the market has been causing this insane volatility because no one wants to hold too many barrels,” a Midwest ...