Diesel Climbs on Speculation Exports to Europe May Rise

Ultra-low-sulfur diesel rallied for a second day on speculation that growth accelerated in Germany, boosting the outlook for distillate demand and for U.S. exports.

Futures climbed 0.9 percent after the median estimate of 46 economists in a Bloomberg survey showed that Germany’s economy may have grown by 0.6 percent in the second quarter. The country’s Federal Statistics Office will release the data on Aug. 14. Distillate stockpiles in the U.S. are 15 percent below the five-year average for this time of year.

“People are really focused on that GDP number and the expectation that we’ll see a little growth,” Jason Schenker, president of Prestige Economics LLC, said by phone from Austin, Texas. “We export a significant amount to Europe and inventories are low here. It’s all very supportive of prices.”

Ultra-low-sulfur diesel for September delivery gained 2.74 cents to settle at $3.0209 a gallon on the New York Mercantile Exchange on volume that was 9.5 percent below the 100-day average at 3:11 p.m.

ULSD’s crack spread versus West Texas Intermediate crude widened $1.01 to $20.77 a barrel, and the premium over Brent crude on ICE Futures Europe rose 40 cents to $17.91.

Distillate stockpiles in the U.S. were 126.5 million barrels in the week ended Aug. 2, the second-lowest level for this time of year in the past five years, according to U.S. Energy Information Administration data.

ICE Gasoil

September gasoil on ICE gained $8.75, or 1 percent, to settle at $914.25 per metric ton as of 11:30 a.m. New York time. Price rallied further to $922.50 as of 2:30 p.m.

Gasoline slipped as a key refinery serving the U.S. East Coast, where Nymex gasoline and diesel futures are delivered, returned from maintenance, adding to supplies that are higher than normal.

Irving Oil Corp.’s 298,800-barrel-a-day Saint John, New Brunswick, refinery is operating “as usual,” said Carolyn Van Der Veen, a company spokeswoman. Over half of the refinery’s finished products, including gasoline and diesel, are exported to the U.S. Northeast, according to the company’s website.

The plant was performing unscheduled maintenance on several units in July, a letter to neighbors dated July 12 showed.

Gasoline for September delivery fell 0.41 cent to settle at $2.9041 a gallon on the exchange. Volume was 16 percent below the 100-day average.

Ample Inventories

Supplies of motor fuel in PADD 1B, which includes New York Harbor, the delivery point for gasoline futures, were 30.4 million barrels, the highest level since July 5, according to Energy Information Administration data.

Nationwide demand for the fuel was 9.25 million barrels a day last week, according to EIA data.

The fuel’s crack spread versus WTI oil slipped 31 cents to $15.86 a barrel, while the fuel’s premium over Brent crude declined 92 cents to $13 a barrel.

With “demand stagnant and inventories growing, crack spreads should continue to narrow in the near term,” Tom Finlon, director of Energy Analytics Group Ltd., said by phone from Jupiter, Florida. “The Canadian issues that bolstered the market over the last few weeks are now solved.”

Pump prices, averaged nationwide, slipped 0.6 cent to $3.549 a gallon, the 11th consecutive decline and lowest level since July 10, Heathrow, Florida-based AAA said today on its website. Prices are 13.6 cents below a year ago.

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