Diesel in U.S. Northeast Strengthens on Turnarounds

Diesel fuel in the U.S. Northeast strengthened to the highest premium to futures in nine months as a refinery began maintenance with stockpiles at the lowest seasonal level since at least 1990.

Ultra low sulfur diesel in New York Harbor added 0.37 cent to 2.5 cents a gallon above futures on the New York Mercantile Exchange at 3:21 p.m., the largest premium since April 2, according to data compiled by Bloomberg. That was also the fourth consecutive daily advance.

The premium swelled after Delta Air Lines Inc. (DAL), the only airline operating a U.S. refinery, began 35 to 40 days of maintenance on a crude unit and an isocracker at its 185,000-barrel-a-day Trainer, Pennsylvania, site. An isocracker converts heavy feedstocks into high-quality distillates and lube oil base stocks.

Stockpiles of distillate fuel in the Central Atlantic, or PADD 1B region, which includes the New York Harbor, gained 898,000 barrels to 18.9 million barrels in the week ended Dec. 27, the first increase in three weeks, according to the U.S. Energy Information Administration. That’s the lowest level for the time of year in data going back to 1990.

Supplies may drop further as U.S. Northeastern refineries including Philadelphia Energy Solutions’ Philadelphia refinery and Irving Oil Corp.’s Saint John site in New Brunswick plan to carry out turnarounds next month.

The Philadelphia site intends to shut a crude unit, alkylation unit, fluid catalytic cracker and distillation unit beginning Feb. 22, while the Saint John plant expects to conduct work on a FCC and other units. The two plants have a combined capacity of 653,800 barrels a day, according to data compiled by Bloomberg.

The 3-2-1 crack spread in the U.S. Northeast, a rough measure of refining margins for gasoline and diesel based on Brent oil in Europe, fell $1.06 a barrel to $9.02, data compiled by Bloomberg showed.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

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

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