Diesel Cracks Narrow as German Unemployment Damps Export Outlook

Ultra-low-sulfur diesel fell and crack spreads narrowed after a refinery in Venezuela resumed full rates and as gasoil sank in Europe after German unemployment rose in April, signaling weaker demand for exports.

ULSD slipped as much as 1.1 percent. The number of Germans out of work climbed to 2.94 million, the Nuremberg-based Federal Labor Agency said. Petroleos de Venezuela SA’s Amuay refinery began production at a distillation unit, completing the plant’s restart after an explosion last year, said an official. May gasoil slipped 0.9 percent on ICE Futures Europe.

“To me, it’s all about Europe,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Weak unemployment numbers there mean that all of our hopes and dreams about sending exports are starting to fade.”

Ultra-low-sulfur diesel for May delivery dropped 2.94 cents, or 1 percent, to $2.8713 a gallon at 10:12 a.m. on the New York Mercantile Exchange. Trading volume was 10 percent below the 100-day average.

The more actively traded June contract fell 2.97 cents to $2.8371 a gallon. May ULSD and gasoline contracts will expire at the 2:30 p.m. close of floor trading today. The fuel’s crack spread versus June West Texas Intermediate crude shrank 39 cents to $25.52 a barrel. The spread versus Brent decreased 23 cents to $16.37.

Gasoline for May delivery fell 2.91 cents, or 1 percent, to $2.7984 a gallon on volume that was 26 percent below the 100-day average. The June contract slipped 2.97 cents to $2.7923.

The fuel’s premium over June West Texas Intermediate declined 39 cents to $23.63 a barrel. The spread to Brent narrowed 17 cents to $14.54.

Gasoline at the pump, averaged nationwide, rose 0.8 cent to $3.508 a gallon, AAA said on its website today.

To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net

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

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