Gulf Coast Diesel Climbs to 2-Month High as Supplies Drop

Diesel fuel on the U.S. Gulf Coast strengthened to a two-month high versus futures and gasoline strengthened for a second day as fuel supplies declined.

Stockpiles of distillates, including diesel and heating oil, in PADD 3 fell 125,000 barrels to 40.3 million in the week ended Jan. 25, snapping a five-week advance, according to the Energy Information Administration, the statistical arm of the Energy Department. Inventories of motor fuel slid 716,000 barrels to 82.1 million last week.

Ultra-low-sulfur diesel fuel on the Gulf gained 3.38 cents to 1.13 cents a gallon over heating oil futures on the New York Mercantile Exchange at 1:48 p.m., the highest level since Nov. 27, according to data compiled by Bloomberg. Reformulated gasoline to be blended with ethanol, or RBOB, in the region rose 1.5 cents to 13 cents below Nymex gasoline futures.

Alon USA Partners LP (ALDW)’s Big Spring and Western Refining Inc. (WNR)’s El Paso refineries in Texas plan to begin scheduled work next month, further drawing from supplies in the U.S. Gulf Coast.

Alon will conduct maintenance on a vacuum unit and replace a catalyst in a reformer and diesel hydrotreater for 10 days in February, while Western plans to shut a portion of its 128,000- barrel-a-day El Paso plant, the companies said.

New York Harbor

The 3-2-1 crack spread on the Gulf Coast, a measure of refining profitability based on West Texas Intermediate in Cushing and spot prices for diesel and gasoline, rose $1.69 to $25.21 a barrel, the highest since Dec. 25. The same spread for Light Louisiana Sweet oil grew $1.29 to $7.31 a barrel.

The same spread in New York Harbor, based on Brent oil in Europe, advanced $1.44 to $13.54, a third consecutive gain. RBOB in the New York gained 0.63 cent to 0.25 cent below futures as the flow of European gasoline to the U.S. East Coast was poised to decline in the two weeks to Feb. 6.

The gap between New York and Gulf Coast RBOB narrowed to 13.34 cents a gallon, compared with minus 1.9 cents a year ago.

Traders and oil companies will book 24 tankers to load the fuel, according to the median estimate in a survey of seven ship brokers and traders specializing in the trade.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

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

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