Bloomberg News

ULSD Advances on Speculation Demand for Exports Will Increase

June 27, 2013

Ultra-low-sulfur diesel gained as stronger June economic reports from Europe and higher gasoil prices indicate greater opportunities for exports from the U.S.

Futures rose as German unemployment unexpectedly fell euro-area economic confidence improved more than economists forecast, indicating the region may be starting its recovery from a recession. Gasoil for July delivery gained 1.5 percent on the ICE Futures Europe exchange. Crack spreads widened.

“We’re seeing support today from good economic headlines out of Europe,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Ultra-low-sulfur diesel for July delivery rose 1.77 cents, or 0.6 percent, to $2.872 a gallon at 10:07 a.m. on the New York Mercantile Exchange. Trading volume was 34 percent below the 100-day average. ULSD widened its monthly gain to 2.9 percent.

ULSD’s crack spread versus West Texas Intermediate crude widened 29 cents to $24.70 a barrel. The premium over Brent increased 8 cents to $18.33 a barrel.

Gasoline was little changed a day after the Energy Information Administration reported that U.S. inventories jumped to the highest seasonal level in two decades as the U.S. approaches the July 4 holiday.

Gasoline Supplies

Supplies rose 3.65 million barrels to 225.4 million last week, the most for this time of year since 1992. Demand, which typically increases during the summer as more Americans go on vacation, was down 0.3 percent over the past four weeks from last year. Refinery utilization rose 0.9 percentage point to 90.2 percent, the highest level since December.

“Gasoline is going to remain under pressure as refinery utilization has now exceeded 90 percent and inventories continue to rise and I expect that trend to continue,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

July-delivery gasoline gained 0.02 cent to $2.7308 a gallon. Trading volume was 3.3 percent above the 100-day average for the time of day. Prices have declined 1.7 percent this month.

Gasoline’s crack spread versus WTI dropped 47 cents to $18.18 a barrel. The fuel’s premium over Brent slipped 64 cents to $11.85 a barrel.

Gasoline at the pump, averaged nationwide, slipped 1.3 cents to $3.528 a gallon, Heathrow, Florida-based AAA said today on its website. Prices have retreated 15 consecutive days and are the lowest since May 6.

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

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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