Diesel Futures Slip as Donges Start Signals French Strike End

Dec 23, 2013 3:39 pm ET

Dec. 23 (Bloomberg) -- Diesel futures snapped a rally in New York as Total SA’s Donges refinery in France restarted units after workers voted to end a strike.

Prices slipped 0.6 percent as the 219,000-barrel-a-day Donges plant operated by Total SA, France’s largest oil company, was gradually starting units, the Paris-based company said today in a statement. Strikes continue at the Feyzin, Gonfreville and La Mede sites, which halted operations last week, according to Christian Votte, a CGT union official.

“The market expects the three strikes that are still under way will get settled rather quickly,” Andy Lipow, president of Lipow Oil Associates LLC, said by phone from Houston. “When the refineries shut down, that reduced the amount of gasoline that was available for export to the U.S. while simultaneously boosting demand for diesel exports. The opposite effect occurs when they return.”

Ultra low sulfur diesel for January delivery slipped 1.8 cents to settle at $3.0601 a gallon on the New York Mercantile Exchange, ending a three-day advance on volume that was 16 percent below the 100-day average at 3:20 p.m.

The crack spread relative to West Texas Intermediate oil declined 30 cents to $29.33 a barrel, while the fuel’s premium over Brent decreased 50 cents to $16.68.

Refinery Glitches

Gasoline’s decline was smaller, as the fuel was supported by stronger demand and refinery glitches in the U.S. Futures slipped 0.1 percent.

LyondellBasell Industries NV’s 302,300-barrel-a-day Houston plant was running a coker at reduced rates following a fire early today, said David Harpole, a company spokesman.

Delta Air Lines Inc.’s 185,000-barrel-a-day Trainer refinery in Pennsylvania plans to begin a turnaround on the No. 543 crude unit next week, Adam Gattuso, a Trainer-based spokesman for the company, said by phone. The refinery also plans to restart a diesel heater today after finishing repairs from a fire.

U.S. gasoline demand climbed 8 percent last week and over the past four weeks was up 3.7 percent from a year ago, according to data from the Energy Information Administration. Total petroleum demand jumped 13 percent to the highest level since 2008.

Gross domestic product climbed at a 4.1 percent annualized rate in the third quarter, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent, Commerce Department figures showed Dec. 20.

Gasoline for January delivery fell 0.28 cent to $2.7803 a gallon on the Nymex. Trading volume was 40 percent lower than the 100-day average.

The fuel’s crack spread versus WTI widened 24 cents to $17.88 a barrel. Gasoline’s premium to Brent oil in Europe widened 4 cents to $5.23.

The average U.S. pump price rose 0.6 cent to $3.25 a gallon yesterday, the fourth consecutive advance, according to Heathrow, Florida-based AAA, the nation’s largest motoring company.

--With assistance from Dan Murtaugh in Houston. Editors: David Marino, Charlotte Porter