Ultra-Low-Sulfur Diesel Gains as Gasoil, Brent Futures Advance

Ultra-low-sulfur diesel rose as gasoil gained in Europe and the International Energy Agency forecast tighter North Sea crude supplies this summer.

Futures advanced as gasoil jumped 1.1 percent on the ICE Futures Exchange in London. Higher prices can attract more imports from the U.S. Brent crude climbed 0.7 percent after the IEA said summer maintenance at North Sea fields could be lengthier and more extensive than usual. Crack spreads widened.

“The IEA said crude supplies short-term may tighten even though they lowered demand expectations,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “That gave us some support.”

Ultra-low-sulfur diesel for July delivery rose 2.79 cents, or 1 percent, to $2.8854 a gallon at 10:02 a.m. on the New York Mercantile Exchange. Trading volume was 24 percent below the 100-day average for the time of day.

The July ULSD contract’s crack spread versus WTI widened 66 cents to $25.30 a barrel, the first gain since June 4. The premium over Brent rose 66 cents to $17.72.

The industry-funded American Petroleum Institute reported yesterday that distillate supplies rose 199,000 barrels last week and gasoline inventories increased 1.04 million barrels.

The Energy information Administration is scheduled to report last week’s inventories at 10:30 a.m. today in Washington. The report will probably show that distillate supplies climbed 1.5 million barrels and gasoline stockpiles gained 500,000 barrels, according to the median of 11 analyst estimates surveyed by Bloomberg.

Supply Build

“The market is expecting a build,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for July delivery rose 0.56 cent to $2.8287 a gallon on trading volume that was 37 percent below the 100-day average.

July gasoline’s crack spread versus West Texas Intermediate narrowed 27 cents to $22.92 a barrel. Gasoline’s premium over Brent slipped 20 cents to $15.41.

Gasoline at the pump, averaged nationwide, rose 0.1 cent to $3.634 a gallon, Heathrow, Florida-based AAA, the nation’s largest motoring organization, said today on its website. Prices are 9.2 cents above a year earlier.

To contact the reporters 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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