Dec. 17 (Bloomberg) -- Ultra low sulfur diesel futures retreated in New York as Brent crude and gasoil contracts weakened in Europe.
ULSD sank 0.9 percent. Brent also fell 0.9 percent and gasoil slid 1.3 percent on the ICE Futures Europe exchange. A drop in Brent, the international benchmark, reduces feedstock costs for refiners in Europe and along the U.S. East Coast processing oil from the North Sea and West Africa. The gasoil decline reduced the profit from exporting distillate fuel from the U.S. to Europe.
“Diesel is being dragged down by Brent,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
ULSD for January delivery fell 2.73 cents to settle at $2.9629 a gallon on the New York Mercantile Exchange. Trading volume was 3.4 percent below the 100-day average as of 3:57 p.m.
ULSD’s crack spread versus West Texas Intermediate, a rough measure of refining profitability, lost 89 cents to $27.22 a barrel. The crack spread versus Brent slipped 18 cents to $15.96 a barrel, based on February contracts.
The Energy Information Administration will probably report tomorrow that supplies of distillates, including diesel and heating oil, were unchanged last week, according to the median estimate of nine analysts in a survey by Bloomberg. Supplies rose during the past two weeks, after dropping in 10 of the previous 11 periods. The EIA is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington.
The survey projected that gasoline stockpiles increased 1.5 million barrels. Gasoline supplies in the week ended Dec. 6 rose 6.72 million barrels as refinery rates jumped to a nine-year seasonal high. The survey projected that utilization rates rose 0.1 percentage point last week.
“Because of the high refinery runs, refiners are going to build products,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “They show no signs of slowing.”
Gasoline for January delivery rose 0.35 cent to settle at $2.6472 a gallon on trading volume that was 3.9 percent below the average at 4:02 p.m.
The motor fuel’s crack spread versus WTI widened 41 cents to $13.96 a barrel. Gasoline’s premium to Brent was $3.22 a barrel, based on February contracts, up from $2.25 yesterday.
The average U.S. pump price fell 0.6 cent to $3.222 a gallon, the ninth consecutive decline, Heathrow, Florida-based AAA said today. Prices are the lowest since Nov. 20.
--Editors: Richard Stubbe, Charlotte Porter