Diesel Hits 7-Week High as Ukraine Tension Boosts Crude

Diesel futures climbed to a seven-week high as rising tensions between Russia and Ukraine inflated crude and gasoil prices.

Prices gained 1.1 percent. President Vladimir Putin warned Ukraine against continuing its offensive against pro-Russian separatists after troops killed five rebels in the city of Slovyansk.

“Ukraine rhetoric is heating up and we’re seeing the price of oil and gasoil going up,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

Ultra low sulfur diesel for May delivery rose 3.36 cents, or 1.1 percent, to $3.0145 a gallon on the New York Mercantile Exchange, the highest settlement since March 4. Volume was 10 percent below the 100-day average at 4:16 p.m.

West Texas Intermediate crude for June delivery on the Nymex gained 50 cents to settle at $101.94 a barrel. Brent for June settlement increased $1.22 to $110.33 a barrel on the London-based ICE Futures Europe exchange. May ICE gasoil futures jumped $8.50 to settle at $926.50 per metric ton.

An agreement to disarm rebels signed last week in Geneva by Ukraine, Russia, the European Union and the U.S. is on the brink of collapse. President Barack Obama said today the U.S. and its allies have additional sanctions against Russia ready to go because Putin’s government has yet to abide by the accord.

Ukraine Violence

“Some of the violence in Ukraine and threats of consequences from the Russian government are supporting crude prices,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Diesel’s crack spread versus WTI widened 92 cents to $24.46 a barrel. The premium to Brent gained 20 cents to $16.07.

Gasoline supplies slipped 274,000 barrels to 210 million last week, less than the 1.65 million reduction projected in a Bloomberg survey. Refineries processed the most crude since Jan. 3, indicating that gasoline output is poised to rise. Plants ran at 91 percent of capacity, up from 83.5 percent a year earlier.

May-delivery gasoline slipped 0.4 cent to $3.0895 a gallon on volume that was 82 percent above the 100-day average.

The average U.S. pump price rose 1.2 cents to $3.685 a gallon, the highest in 13 months, according to data from Heathrow, Florida-based AAA. Prices are 16.9 cents higher than a year ago.

Gasoline’s crack spread versus WTI narrowed 30 cents to $25.96 a barrel. The motor fuel’s premium to Brent crude fell $1.02 to $17.57. The spreads are based on June contracts.

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