Diesel Gains as Distillate Inventories Sink Most in Three Months
Ultra-low-sulfur diesel gained after a government report that distillate supplies declined the most in three months last week and as crude futures advanced.
Futures rose as the Energy Information Administration reported that distillate stocks fell 1.68 million barrels, the most since June 28, to 129.2 million. West Texas Intermediate crude rose as much as 1.9 percent after TransCanada Corp. said it expects to commission the southern leg of its Keystone pipeline expansion from Cushing, Oklahoma, to the Texas Gulf Coast by the end of October.
“The decline in distillate inventories was the most supportive aspect of the report,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “With the Keystone news, the bulls saw their opportunity and they’re taking it.”
Ultra-low-sulfur diesel for November delivery rose 3.26 cents, or 1.1 percent, to $2.9879 a gallon at 1:05 p.m. on the New York Mercantile Exchange. Trading volume was 2.8 percent above the 100-day average.
Gasoline lagged behind the gains in diesel and crude. Inventories of the motor fuel rose 3.5 million barrels to 219.7 million in the week ended Sept. 27. Analysts in a Bloomberg survey estimated a 700,000-barrel decline.
Gasoline for November delivery rose 0.88 cent, or 0.3 percent, to $2.6194 a gallon. Trading volume was 16 percent below the 100-day average.
Refinery utilization fell 1.3 percentage points to 89 percent, the lowest level since June 7.
“The crack spreads are telling the refiners to stop making so much gasoline,” Evans said. “The market is waving its hands in the air here to tell us the gasoline market is oversupplied.”
Pump prices, averaged nationwide, fell 0.8 cent to $3.385 a gallon, the lowest level since Jan. 28 and 39.5 cents below a year ago, Heathrow, Florida-based AAA said today on its website.
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