Diesel futures advanced after an Energy Information Administration report that showed frigid weather and winter storms reduced already tight supplies of heating fuel in the U.S. Northeast last week.
Supplies of diesel and heating oil in PADD 1B, which includes New York, the delivery point for futures contracts, slid 14 percent to 13.6 million barrels, the least since May 2003. Nationwide, distillate stockpiles were at the lowest seasonal level since 2005. The eastern U.S. has a 50 to 80 percent chance for below-normal temperatures through Feb. 14, according to the U.S. Climate Prediction Center in College Park, Maryland.
“Distillates are supported by the continued cold-weather forecasts in the Northeast, which will continue to tighten supplies,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Ultra low sulfur diesel for March delivery rose 1.39 cents, or 0.5 percent, to settle at $2.9968 a gallon on the New York Mercantile Exchange. Trading volume was 16 percent above the 100-day average as of 3:40 p.m.
In the New York Harbor spot market, diesel rose 2 cents to a record 42 cents a gallon above futures at 3:37 p.m., data compiled by Bloomberg showed.
A storm out of the Rockies is expected to reach the East Coast by Feb. 9, and it may be the worst of the week, AccuWeather said.
Prices touched $3.0149 just after the 10:30 a.m. release of the EIA report before paring the advance.
Higher prices are attracting cargoes from abroad, which may replenish supplies and push prices lower in coming days. Imports of distillate into the U.S. East Coast were 74 percent above the five-year average last week, according to EIA data.
“Currently, there are a lot of cargoes coming from Europe and Russia and that would increase supplies,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Distillate stockpiles, including diesel and heating oil, slipped 2.36 million barrels last week to 113.8 million, the EIA reported. A survey by Bloomberg estimated a 2.5-million-barrel decline. Demand slipped 13 percent from the prior week, EIA data show.
“Many of us were looking for a bigger draw and we missed the estimate,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “The market is a little tired.”
Distillate demand fell 584,000 barrels a day to 3.94 million, according to EIA data.
“People are thinking, ‘even when you had really cold weather, that’s the best you can do?’” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.
Diesel’s crack spread versus WTI, a rough measure of refining profitability, widened 39 cents to $28.49 a barrel. The premium over European benchmark Brent gained 11 cents to $19.62.
Gasoline gained as supplies increased less than forecast. Inventories rose 505,000 barrels to 235 million, a three-year seasonal high. The survey estimated an increase of 1.15 million barrels. Gasoline imports jumped 52 percent to 587 million barrels, an eight-week high.
March-delivery gasoline rose 3.82 cents, or 1.5 percent, to $2.6413 a gallon on trading volume that was 8.7 percent below the 100-day average.
The motor fuel’s crack spread versus WTI widened $1.41 to $13.55 a barrel. Its premium to London-traded Brent crude climbed $1.13 to $4.68.
The average U.S. pump price fell 0.2 cent to $3.272 a gallon, according to data from Heathrow, Florida-based AAA. Prices have dropped 5.1 cents this year and are 26.1 cents below a year ago.