ULSD Futures Decline on U.S. Payroll Data; Crack Spread Narrows

Ultra-low sulfur diesel slid for a third day after U.S. employers hired fewer workers in March, raising concern that economic growth and fuel demand is slowing. The crack spread on Nymex narrowed.

Futures fell as Labor Department figures showed the smallest payroll growth in nine months and the jobless rate at a four-year low because the labor force is shrinking. Two reports earlier this week showed manufacturing and service sectors expanded more slowly. ULSD’s crack spread versus WTI declined 50 cents to $30.71 a barrel and its premium to gasoline narrowed.

“Today’s unemployment number is horrible,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “You’re marrying lousy economic headlines with the current trend we’ve seen in manufacturing. Distillate is more of a link to the industrial than gasoline, whose use tends to be discretionary.”

Ultra-low-sulfur-diesel for May delivery fell 3.5 cents, or 1.2 percent, to $2.9286 a gallon at 10:04 a.m. on the New York Mercantile Exchange. Trading volume was 22 percent above the 100-day average for the time of day.

ULSD’s premium to gasoline narrowed by 1.7 cents to 4.7 cents a gallon. The fuel’s crack spread versus Brent slipped 1 cent to $18.12 a barrel.

Payrolls grew by 88,000 workers last month, after a revised 268,000 gain in February that was higher than first estimated, Labor Department figures showed. The jobless rate fell to 7.6 percent from 7.7 percent. The labor force participation rate fell to 63.3 percent, the lowest since May 1979.

Factory Index

The Institute for Supply Management’s factory index fell to 51.3 from an almost two-year high of 54.2 in February, the Tempe, Arizona-based group’s figures showed on April 1. The ISM index of U.S. non-manufacturing businesses, which covers almost 90 percent of the economy, fell to 54.4 in March from 56 in the prior month.

Gasoline for May delivery fell 1.711 cents, or 0.6 percent to $2.8816 a gallon on volume that was 8.7 percent above the 100-day average.

Gasoline at the pump, averaged nationwide, fell 1.1 cents to $3.625 a gallon, AAA said today on its website. Prices are 31.1 cents below a year earlier, when prices reached a 2012 high of $3.936.

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

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

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