Los Angeles diesel tumbled to the lowest level since 2008 after a government report showed regional stockpiles of the fuel jumped to a six-month high.
Diesel’s discount widened after the Energy Information Administration said distillate fuel oil supplies in the U.S. West Coast, known as the PADD 5 region, surged by 1.06 million barrels, or 8.3 percent, in the week ended Jan. 3 to 13.8 million, the most since July.
California-grade, or CARB, diesel in Los Angeles dropped 1.75 cents to a discount of 7 cents a gallon against ultra low sulfur diesel futures traded on the New York Mercantile Exchange at 2:03 p.m. New York time, data compiled by Bloomberg show. That’s the biggest discount for the fuel since Dec. 17, 2008.
The fuel has weakened for three straight days as distillate production in the region hovers at the highest seasonal level in six years.
Gasoline stockpiles on the U.S. West Coast jumped by 2.1 million barrels, or 6.9 percent, to 32.4 million last week, the most since March, according to the EIA.
The discount for Carbob in Los Angeles swelled 8.25 cents to 9.5 cents a gallon against futures traded on the Nymex. The same fuel in San Francisco tumbled 7.75 cents to a discount of 14.25 cents a gallon.
Jet fuel in Los Angeles weakened 1.25 cents to 5.75 cents a gallon under ULSD futures.
The 3-2-1 crack spread, assuming two barrels of Carbob gasoline and one barrel of CARB diesel in Los Angeles is refined out of three barrels of Alaska North Slope crude, narrowed $2.66 a barrel to $9.19 at 2:05 p.m. New York time, data compiled by Bloomberg show. The spread, an indicator of refining profitability in the western U.S., is the lowest since Dec. 17.
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