Midwest Diesel Soars to Six-Week High on Inventory Slump

U.S. Midwest diesel fuel strengthened to a six-week high relative to futures after a government report showed area inventories slumped.

Ultra-low-sulfur diesel fuel in Group 3, the area from Tulsa, Oklahoma, north to Minnesota and North Dakota, gained 0.38 cent to a premium of 1.63 cents versus New York Mercantile Exchange futures at 2:36 p.m., the strongest level since June 18, according to data compiled by Bloomberg. The same fuel in Chicago weakened 0.5 cent to a discount of 3 cents a gallon.

Stockpiles of the fuel in the Midwest, known as PADD 2, retreated 177,000 barrels to 28.7 million barrels in the week ended July 26, a second consecutive decline, according to U.S. Energy Information Administration data. Regional inventories of gasoline slipped 838,000 barrels to 48.3 million.

The 3-2-1 crack spread in Group 3, a rough measure of refining margins for gasoline and diesel based on West Texas Intermediate oil in Cushing, Oklahoma, widened 29 cents to $21.90 a barrel. The same spread in Chicago dropped 35 cents to $18.43 a barrel.

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