ULSD Surges as Central Banks Signal Lower Rates to Spur Growth

Ultra-low-sulfur diesel futures advanced for the first time in five days as some central banks indicated they planned to continue measures to promote economic growth that could spur fuel demand.

Diesel rose as much as 2.2 percent after Japanese Economy Minister Akira Amari told reporters in Tokyo today that Bank of Japan Governor Haruhiko Kuroda plans to pursue quantitative and qualitative easing to support the economy. Hungary’s central bank cut the main interest rate for a 10th month to a record low 4.5 percent. The Bank of Israel reduced borrowing costs for a second time this month to 1.25 percent, the lowest in more than three years.

“The big story is that central banks are continuing to keep low interest rates, and as a result we’re seeing rising commodity prices,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Central banks around the world are indicating they’re going to continue with a low-interest-rate policy designed to promote economic growth.”

ULSD for June delivery rose 5.67 cents to $2.9136 a gallon at 9:42 a.m. on the New York Mercantile Exchange. Trading volume was 12 percent below the 100-day average.

July ULSD’s crack spread versus WTI crude oil widened 93 cents to $26.66 a barrel. July ULSD’s premium over Brent was little changed at $17.77 a barrel.

Gasoline for June delivery rose 3.12 cents, or 1.1 percent, to $2.8702 a gallon on the Nymex. Trading volume was 9.1 percent below the 100-day average.

Gasoline’s crack spread versus West Texas Intermediate slipped 1 cent to $24.53 a barrel. July gasoline’s premium over July Brent shrank by 52 cents to $15.66.

Gasoline at the pump, averaged nationwide, fell by 0.5 cent to $3.626 a gallon, AAA said on its website today. Prices have dropped for six days in a row.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.