Diesel Extends April Decline as Gasoil Drop Damps Export Outlook

Ultra-low-sulfur diesel fell, extending a monthly drop, after a refinery in Venezuela resumed full rates and an increase in German unemployment helped push gasoil lower, signaling weaker demand for U.S. fuel exports.

ULSD slipped 0.9 percent, boosting April’s slide to 1.4 percent. The number of Germans out of work climbed to 2.94 million in April, the Nuremberg-based Federal Labor Agency said. Petroleos de Venezuela SA’s Amuay refinery began production at a distillation unit, completing the plant’s restart after an explosion last year, said an official. May gasoil slipped 1.4 percent on ICE Futures Europe.

“It’s all about Europe,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Weak unemployment numbers there mean that all of our hopes and dreams about sending exports are starting to fade.”

Ultra-low-sulfur diesel for May delivery dropped 2.72 cents to settle at $2.8735 a gallon on the New York Mercantile Exchange. Trading volume was 3.2 percent below the 100-day average.

May ULSD and gasoline contracts expired at the 2:30 p.m. close of floor trading today.

The more actively traded June contract also fell 2.72 cents to $2.8396 a gallon. The fuel’s crack spread versus June West Texas Intermediate crude shrank 11 cents to $25.80 a barrel. The spread versus Brent gained 29 cents to $16.89.

Inventory Report

Distillate inventories in the U.S., including diesel and heating oil, may have increased 250,000 barrels last week, according to the median of 11 analyst estimates in a survey compiled by Bloomberg. Gasoline supplies probably decreased 900,000 barrels, the survey showed.

Gasoline for May delivery slipped 2.65 cents, or 0.9 percent, to $2.801 a gallon on volume that was 26 percent below the 100-day average. The fuel fell 9.8 percent on the month, the most since October and the biggest April slide since 2003.

The June contract slipped 2 cents to $2.802. The fuel’s premium over June West Texas Intermediate grew 20 cents to $24.22 a barrel. The spread to Brent strengthened 60 cents to $15.31.

Gasoline at the pump, averaged nationwide, rose 0.8 cent to $3.508 a gallon, AAA said on its website today. Prices fell 12.6 cents on the month, the second-straight monthly decline.

Prices averaged $3.55 in April, the lowest level since 2010, and could fall to $3.20 to $3.40 a gallon during the summer, the Heathrow, Florida-based motoring organization said in a report.

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