Midcontinent Diesel Tumbles to Record Low as Demand Slips

U.S. Midcontinent diesel fuel dropped to the lowest level on record after stockpiles rose amid low demand. Crack spreads rose.

Ultra-low-sulfur diesel in the Midcontinent, or Group 3 region, slumped 1.25 cents to 12.25 cents a gallon below New York Mercantile Exchange futures at 3:53 p.m., the lowest level in data going back to 2006. Diesel in Chicago was unchanged at a discount of 20 cents, equaling the weakest spread since April 18, 2012, according to data compiled by Bloomberg.

Distillate stockpiles in the U.S. Midwest, known as PADD 2, grew 796,000 barrels to 25 million barrels in the week ended Nov. 29, the first increase in six weeks, according to U.S. Energy Information Administration data. Nationwide consumption of diesel slumped 474,000 barrels a day to 3.55 million last week, a six-week low.

The market is being pressured by slower demand and the weaker Chicago market, said Ed Malloy, president of Danaher Oil Co., an oil broker in Fairfield, Iowa.

The 3-2-1 crack spread in Group 3, a rough measure of refining margins based on West Texas Intermediate oil in Cushing, Oklahoma, rose 16 cents to $9.25 a barrel, according to data compiled by Bloomberg. Group 3 includes the area north of Tulsa, Oklahoma, to Minnesota and North Dakota.

Crack Spread

The crack spread on the Gulf, using WTI, gained 49 cents to $13.36 a barrel, the first increase in six days. The same spread based on Light Louisiana Sweet oil, the Gulf Coast benchmark, rose 24 cents to $8.61. Gulf Coast diesel traded at 3.62 cents above Group 3, the largest premium since Oct. 25.

Ultra-low-sulfur diesel on the Gulf slipped 0.13 cent to 8.63 cents a gallon below Nymex futures. The differential has averaged 2.11 cents below futures in 2013.

Conventional, 87-octane gasoline on the Gulf Coast rose 1.75 cents to 22 cents a gallon under futures, while conventional CBOB gasoline advanced 1 cent to 24.75 cents below futures, the data show.

California-blend diesel in Los Angeles weakened as Tesoro Corp. completed planned maintenance at its Los Angeles refining complex. The fuel dropped 1.75 cents a gallon versus Nymex futures to a discount of 4.5 cents.

State-blend diesel in San Francisco was unchanged at 7.5 cents a gallon below futures. Low-sulfur diesel in Portland, Oregon, was unchanged at 13.5 cents below futures.

State-blend gasoline in Los Angeles strengthened by 0.5 cent to a 1-cent discount to futures. The fuel in San Francisco weakened by 1.5 cents to a 14-cent discount. Conventional, 84-octane gasoline in Portland eased 2 cents to a discount of 20 cents.

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