Diesel Slips as Gasoil Weakens in Europe on Higher Supply

Diesel futures slid the most in almost four weeks in New York on speculation that export demand will shrink as supplies in Europe accumulate and gasoil prices decline.

Prices fell 1.2 percent. Gasoil supplies in Northeast Europe’s oil storage hub rose 3.4 percent in the week ended April 18, according to Genscape Inc. Gulf Coast distillate supplies rose 2.8 percent to 36.4 million barrels that week, Energy Information Administration data show. The Gulf Coast accounted for 84 percent of U.S. distillate exports in January.

“Refineries are coming out of maintenance in Russia and Europe and the U.S., and that will increase runs,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.

Ultra low sulfur diesel for May delivery fell 3.47 cents, or 1.2 percent, $2.9519 a gallon on the New York Mercantile Exchange, the biggest drop since April 1. Volume was 18 percent below the 100-day average as of 3:23 p.m.

Gasoil for May delivery on the London-based ICE Futures Europe exchange fell $5.75 to $914 per metric ton.

Products were pressured by a weaker Brent crude, which fell as Libya opened the way for oil exports to resume from the eastern port of Zueitina, one of four ports seized by rebels in July. A second port, Hariga, has resumed operations. Brent for June settlement on ICE exchange slipped $1.46, or 1.3 percent, to $108.12 a barrel.

Under Pressure

“Brent is under some pressure since they lifted the force majeure on the port of Zueitina,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.

U.S. distillate production rose for a seventh time in the week of April 18, jumping 2.1 percent to a three-month high of 4.98 million barrels a day, according to EIA data.

Diesel’s crack spread versus WTI narrowed $1.77 to $22.83 a barrel. The premium to Brent dropped 7 cents to $15.55.

May-delivery gasoline fell 3.48 cents, or 1.1 percent, to settle at $3.0403 a gallon on volume that was 5.3 percent above the 100-day average. It was the fourth straight decline and largest drop since April 1.

The average U.S. pump price was unchanged at a 13-month high of $3.696 a gallon, according to data from Heathrow, Florida-based AAA. Prices are 19.6 cents higher than a year ago.

Gasoline’s crack spread versus West Texas Intermediate dropped $1.93 to $24.59 a barrel. The motor fuel’s premium to Brent crude fell 23 cents to $17.31. The spreads are based on June contracts.

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