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Diesel Slips as Slower Chinese Growth Threatens Global Demand

Diesel futures in New York slipped as slowing Chinese growth threatens global distillate demand.

The fuel fell as much as 1 percent after China’s official Purchasing ManagersIndex (EC11CHPM) decreased to a six-month low in January as output and orders slowed. U.K. manufacturing also expanded at a lesser pace last month.

“Slower economic growth outside the U.S. will result in slower increases in demand for diesel,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Ultra low sulfur diesel for March delivery fell 2.58 cents to $2.9713 a gallon at 10:40 a.m. on the New York Mercantile Exchange. Trading volume was 19 percent above the 100-day average.

The Chinese Purchasing Managers’ Index was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. In the U.K., the Purchasing Managers’ Index declined to 56.7 last month from 57.2 in December.

March-delivery diesel’s crack spread versus WTI, a rough measure of refining profitability, narrowed 61.6 cents to $27.772 a barrel. The premium over European benchmark Brent declined 42.7 cents to $19.091.

March-delivery gasoline slipped 1.8 cents to $2.6134 a gallon on volume that was 44 percent below the 100-day average. Prices declined 5.7 percent last month, the most since September.

The motor fuel’s crack spread versus WTI slid 10 cents to $12.929 a barrel. Its premium to London-traded Brent crude widened 23.5 cents to $4.025.

The average U.S. pump price declined 0.1 cent to $3.279 a gallon, according to data from Heathrow, Florida-based AAA. Prices have fallen 4.4 cents this year.

To contact the reporter on this story: Barbara Powell in Houston at bpowell4@bloomberg.net

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

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