Diesel Slides to Four-Week Low as Higher Imports Boost Supply

Diesel futures slid to a four-week low as the highest imports in four years boost supply while warmer weather reduces demand.

Prices dropped a fourth straight day. Inventories grew to a five-week high through Feb. 28 as imports jumped to 404,000 barrels a day, the most since February 2010. New York City’s high today may be 30 degrees Fahrenheit (minus 1 Celsius) and 42 tomorrow, 5 below normal, according to AccuWeather Inc.

‘We’ve seen a big upswing in imports that’s a lot larger than people expected and that’s bearish for distillates,’’ Jim Ritterbusch, president of Ritterbusch & Associates, said by phone from Galena, Illinois, today. “We’re also moving out of the winter period where there’s less risk of weather that would drive prices higher.”

Ultra low sulfur diesel for April delivery declined 0.92 cent, or 0.3 percent, to settle at $2.983 a gallon on the New York Mercantile Exchange. Volume was 1.9 percent below the 100-day average as of 4:35 p.m.

Distillate stockpiles increased 1.4 million barrels to 114.5 million while consumption fell a fifth straight week, sliding 2 percent to 3.55 million barrels a day, Energy Information Administration data show.

Under Pressure

“Between the surprise build in inventories and higher imports, the distillate market is coming under pressure,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The distillate export market has eased because higher prices have kept volume in the U.S. The market anticipates that demand will fall off as we go through March.”

The fuel’s crack spread versus West Texas Intermediate crude, a rough measure of refining profitability, narrowed 50 cents to $23.73 a barrel. The premium over European benchmark Brent fell 73 cents to $17.19.

Gasoline for April delivery rose 0.52 cent to settle at $2.9455 a gallon. Volume was 9.8 percent below the 100-day average.

The motor fuel’s crack spread versus WTI widened 11 cents to $22.15 a barrel. Its premium to Brent was 12 cents lower at $15.61.

Stockpiles of the fuel tumbled 1.6 million barrels to 229 million barrels last week, the lowest in almost two months, according to EIA data.

The average U.S. pump price added 1 cent to $3.474 a gallon, the highest since Sept. 21, according to data from Heathrow, Florida-based AAA. Prices have risen 27 consecutive days, the longest string of gains since February 2013. Drivers are paying 25.3 cents less than a year ago.

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