Dec. 16 (Bloomberg) -- Ultra low sulfur diesel futures rose as a French refinery strike threatened to reduce gasoil supplies in Europe and as Brent crude advanced.
Diesel climbed 0.5 percent. Total SA’s five refineries in France have stopping supplying fuel and two of the plants are halting production, according to a labor union. That may increase demand for U.S. exports across the Atlantic Ocean. Brent rose after Libyan rebels refused to hand over control of three oil ports to the government, increasing feedstock costs for refiners in Europe and along the U.S. East Coast.
“Those two refineries that are closed are big suppliers of diesel,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “It looks like they’re going to draw this out a bit longer. Gasoil has tightened up in Europe.”
ULSD for January delivery rose 1.45 cents to settle at $2.9902 a gallon on the New York Mercantile Exchange. Trading volume was 3.2 percent above the 100-day average at 2:50 p.m. Futures are up 0.6 percent this quarter and have declined 1.8 percent this year.
The fuel’s crack spread versus West Texas Intermediate, a rough measure of refining profitability, lost 27 cents to $28.11 a barrel. The crack spread versus European benchmark Brent fell 48 cents to $16.18.
Employees at refineries in Gonfreville, Donges, La Mede, Granpuits and Feyzin started industrial action on Dec. 13 because of a pay dispute, according to the CGT. The five French refineries can process about 800,000 barrels a day of crude, or 60 percent of the nation’s capacity, according to data compiled by Bloomberg.
Futures pared gains after workers at the Donges plant voted today to end the strike. The refinery continues to operate at very low level because of a “technical incident,” Christian Votte, a CGT union representative, said by phone.
Brent crude rose $1.64, or 1.5 percent, to $110.47 a barrel on the ICE Futures Europe exchange. Brent slid 2.5 percent last week on speculation that the ports, shut since July, would be reopened. Gasoil for January delivery jumped $13.75 to settle at $931.50 per metric ton on the exchange.
“Eastern Libyan oil ports remain closed and production may be curtailed for an extended period of time,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “That in conjunction with the French strikes is supporting the diesel market.”
Gasoline for January delivery advanced 1.44 cents, or 0.6 percent, to $2.6437 a gallon. Trading volume was 38 percent below the 100-day average.
The motor fuel’s crack spread versus WTI narrowed 28 cents to $13.56 a barrel. Gasoline’s premium to Brent decreased 49 cents to $1.63 a barrel.
The average U.S. pump price fell 0.5 cent to $3.228 a gallon, the eighth consecutive decline, Heathrow, Florida-based AAA said today. Prices are the lowest since Nov. 20.
--With assistance from Grant Smith, Morgane Lapeyre and Konstantin Rozhnov in London, Mark Shenk in New York, Maher Chmaytelli in Dubai, Mariam Sami in Cairo and Dan Murtaugh in Houston. Editors: David Marino, Richard Stubbe