Oct. 9 (Bloomberg) -- Ultra-low-sulfur diesel slid as crude tumbled after the government reported that oil inventories grew the most in a year last week.
Futures dropped 0.5 percent as crude sank the most since Sept. 10. The Energy Information Administration reported that oil stockpiles rose 6.81 million barrels in the week ended Oct. 4. Distillate inventories fell 2.4 percent.
“Are you going to stand there and buy more heating oil futures when the sky is falling in crude oil futures?” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.
Ultra-low-sulfur diesel for November delivery declined 1.51 cents to settle at $3.0174 a gallon on the New York Mercantile Exchange, after settling yesterday at the highest level since Sept. 18. Trading volume was 1.2 percent above the 100-day average at 3:47 p.m.
West Texas Intermediate crude for November delivery declined $1.88, or 1.8 percent, to $101.61 a barrel on the Nymex.
Distillate inventories fell 3.14 million barrels to 126 million. Analysts in a Bloomberg survey estimated a 1.15 million-barrel withdrawal. Supplies in the U.S. East Coast, or PADD 1, declined 1.51 million barrels to 40 million. Exports were estimated at a record 1.39 million barrels a day, based on the latest monthly data for July. That’s 28 percent higher than a year earlier.
“There’s two significant downside risks for heating oil and diesel,” Evans said. “One is falling crude prices. And at some point, the export market hits a wall.”
ULSD’s premium versus West Texas Intermediate, a rough measure of the refining margin, widened $1.25 to $25.12 a barrel. The crack spread over Brent rose 47 cents to $17.67.
Crude stocks are up more than expected, Evans said. “Distillate stocks are down more than expected. It’s a crack- spread trade,” Evans said.
Prices also slid as the partial U.S. government shutdown entered a ninth day with no resolution. Besides the budget impasse that led to the shutdown, U.S. borrowing authority will lapse on Oct. 17 unless a politically divided Congress raises the debt ceiling.
“The market is getting concerned that the deadlock is going to spill over into the debt-ceiling negotiations,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Heating oil is getting dragged down by crude although it’s not unexpected crude would build in the midst of fall maintenance.”
Gasoline stockpiles rose 149,000 barrels to 219.9 million. Analysts estimated a 1.05-million-barrel increase. Inventories in PADD 1 grew 2.4 million barrels to 58.4 million as imports climbed 7.3 percent to 547,000 barrels a day. PADD 1 includes New York Harbor, the delivery point for Nymex gasoline and diesel futures.
Gasoline for November delivery slipped 0.76 cent, or 0.3 percent, to $2.623 a gallon on trading volume that was 2.9 percent below the 100-day average.
The motor fuel’s crack spread versus WTI widened $1.56 to $8.56 a barrel. The fuel’s premium to Brent increased 78 cents to $1.11 a barrel.
Pump prices, averaged nationwide, increased 0.5 cent to $3.354 a gallon, 46.1 cents below a year ago, Heathrow, Florida- based AAA said today on its website.
--With assistance from Kathleen Hunter, Julianna Goldman and Richard Rubin in Washington. Editors: David Marino, Charlotte Porter