Ultra low sulfur diesel in New York Harbor gained versus futures as increased heating fuel demand and refinery outages crimped supply.
Diesel’s premium to March futures traded on the New York Mercantile Exchange widened 2.5 cents to 22 cents a gallon as of 12:35 p.m., according to data compiled by Bloomberg. The spread earlier today jumped to 28 cents, the strongest performance since 2008, indicating concern that supplies are scarce.
Inventories of diesel and heating oil in PADD 1B, which includes New York, slid 7.7 percent last week as frigid weather gripped the region, according to Energy Information Administration data. Inventories are the lowest for this time of year in data going back to 1990.
“The cash market is very tight,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Ultra low sulfur diesel for February delivery, which expires today, jumped 6.82 cents, or 2.1 percent, to $3.2852 a gallon at 1:09 p.m. on the Nymex. The more-active March futures fell 0.12 cent to $3.0263. Backwardation is a market structure in which short-term supplies cost more than later deliveries.
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