ULSD Jumps to Four-Week High on Anticipation of Higher Demand

Ultra-low-sulfur diesel rose to the highest level since April 10 on anticipation demand will increase as planting picks up and as gasoil gained in London.

Futures rose for the fifth time in six days. Twelve percent of the corn crop was planted through May 5, compared with an average 47 percent in the past five years. Stronger gasoil prices increased the incentive to export to Europe from the U.S. ULSD’s crack spread versus West Texas Intermediate crude gained $1.15 to $26.95 a barrel. The premium over Brent widened 79 cents to $18.87.

“Distillate might get support from anticipation of demand from the planting season, which has been delayed because of weather,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Ultra-low-sulfur diesel for June delivery rose 2.19 cents, or 0.8 percent, to $2.9366 a gallon on the New York Mercantile Exchange. Prices have jumped 5.3 percent since May 1. Trading volume was 15 percent above the 100-day average at 3:32 p.m.

Gasoil for delivery in May on the London ICE Futures Exchange rose $3.75 to $867.50 a metric ton, while the more actively traded June contract increased $4.25 to $870.50. Trading volume on all gasoil contracts was 18 percent above the 100-day average.

Futures rose even as the Energy Information Administration reported yesterday that U.S. distillate inventories jumped last week to a seven-week high. Distillates, including heating oil and diesel, increased 1.81 million barrels last week to 117.6 million.

Gasoline Inventories

Gasoline inventories fell 910,000 barrels to 215.1 million in the week ended May 3, the lowest level since Nov. 30 and greater than the 475,000-barrel drop estimated in the survey.

East Coast gasoline stocks are at the highest level for this time of year since 1999 after dropping 182,000 barrels last week to 61.5 million, the first decline in five weeks. Imports to the East Coast rose 156,000 barrels to 720,000 barrels a day.

Gasoline for June delivery rose 3.13 cents, or 1.1 percent, to $2.8851 a gallon on the Nymex, the highest settlement since April 9. Trading volume was 1 percent below the 100-day average at 3:41 p.m.

The fuel’s crack spread versus WTI increased $1.54 to $24.78 a barrel, and the fuel’s premium over Brent widened $1.18 to $16.70.

Gasoline at the pump, averaged nationwide, rose 1 cents to $3.549 a gallon, AAA said today on its website.

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