Diesel futures rose as supplies declined and temperatures were projected to plummet through next week across the Midwest and Northeast, increasing demand for heating fuel.
Prices climbed 1 percent. Supplies of distillates, including diesel and heating oil, fell 339,000 barrels to 112.7 million, the Energy Information Administration reported. The median estimate of 10 analysts in a Bloomberg survey was a 2.1 million barrel drop. Stockpiles of heating oil along the East Coast, where most of the households using the fuel are located, sank 1 million barrels to 9.2 million.
“East Coast stocks drew plus you have a cold front coming,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Ultra low sulfur diesel for March delivery rose 3.09 cents, to $3.1777 on the New York Mercantile Exchange, the highest settlement since Jan. 31. Trading volume was 28 percent above the 100-day average at 3:45 p.m.
Temperatures from the U.S. Midwest to the Northeast will be below normal from Feb. 25 to March 5, according to the National Weather Service’s Climate Prediction Center.
Diesel’s crack spread versus West Texas Intermediate crude, a rough measure of refining profitability, widened $1.69 to $30.54 a barrel. The premium over European benchmark Brent increased 62 cents to $19.20 a barrel.
Gasoline futures advanced 0.8 percent after sliding 1.4 percent before the EIA report.
Supplies of the motor fuel rose 309,000 barrels, to 233.4 million last week, seasonally a three-year high. A survey by Bloomberg projected a decline of 850,000 barrels. Demand fell 3.5 percent to 8.03 million barrels a day, a five-week low.
“There were whisper numbers that demand was really low because people didn’t drive because of the weather,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “Demand is weak but people were expecting worse.”
March-delivery gasoline gained 2.19 cents, or 0.8 percent, to settle at $2.8466 a gallon, the highest since Sept. 6. Trading volume was 11 percent above the 100-day average.
Supplies of gasoline on the East Coast, which includes New York Harbor, the delivery point for the Nymex contract, declined 509,000 barrels to 63 million.
“We expected with all the very bad weather that inventories would build and not decline,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The motor fuel’s crack spread versus WTI widened $1.31 to $16.64 a barrel. Its premium to London-traded Brent oil gained $1.19 to $16.58.
The average U.S. pump price gained 0.8 cent to $3.383 a gallon, according to data from Heathrow, Florida-based AAA. Prices have risen 13 consecutive days to the highest level since Oct. 1, and are 38.3 cents below a year earlier.