Bloomberg News

New York Diesel Widens Yearly Gain on Europe Refinery Shutdowns

December 30, 2011

Dec. 30 (Bloomberg) -- Diesel in New York Harbor widened yearly gains after three European refineries began closing, indicating greater demand for U.S. exports.

The fuel strengthened as Petroplus Holdings AG, Europe’s largest independent refiner by capacity, will suspend operations at three plants in the region after banks froze $1 billion of the company’s loans. The sites have a combined processing capacity of 337,300 barrels of crude a day, and the closures may reduce European supplies of diesel.

The U.S. exported a record 1.07 million barrels a day of heating oil and diesel fuel in October, the Energy Department reported yesterday. About 18 percent, or 196,000 barrels a day, went to the Netherlands, the top destination for U.S. diesel and heating oil cargoes, Energy Department data show.

Ultra-low-sulfur diesel in New York Harbor gained 0.63 cent to a 3.88-cent premium to heating oil futures on the New York Mercantile Exchange, the first gain in three days. The gap at the end of 2010 was 0.55 cent.

Prompt delivery diesel in the Harbor rose 2.38 cents to $2.9738 a gallon. The price advanced 17 percent this year.

Chicago ultra-low-sulfur diesel’s discount to futures was unchanged at 25 cents a gallon, the biggest gap since at least July 2006, according to data compiled by Bloomberg. The spread has widened 16.87 cents this year.

Prompt delivery for the fuel in Chicago, which rose 8.6 percent this year, fell 0.59 cent to $2.6642 today.

Midcontinent Weaker

The same fuel in the Midcontinent, or Group 3 market, weakened 0.63 cent to a 6.88-cent discount, 4.38 cents wider than a year earlier. The immediate-delivery price increased 1.13 cents to $2.8663 a gallon, and was up 14 percent this year.

In the Gulf Coast, diesel weakened 0.96 cent to an 0.08- cent discount from a premium yesterday, compared with a 3.7-cent discount at end-2010. Prompt delivery of the fuel fell 0.58 cent to $2.9231 a gallon today, and was up 17 percent this year.

January-delivery heating oil rose 1.75 cents, or 0.6 percent, to settle at $2.935 a gallon on the Nymex, while the February contract slipped 0.59 cent to $2.9142. Futures rose 15 percent this year, after gaining 20 percent in 2010.

--Editors: David Marino, Richard Stubbe

To contact the reporter on this story: Barbara J. Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net.


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