New York Diesel Is So Scarce Traders Are Turning to Unusual Source
- Traders eye Mercantile Exchange to stock up on supplies
- Change of strategy highlights tightness of fuel market
A diesel fuel pump at a gas station.
Photographer: Daniel Acker/Bloomberg
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Diesel has become so tight and so expensive that East Coast suppliers are turning to an unusual source to stock up: the New York Mercantile Exchange.
Record-low seasonal inventories and rising demand ahead of the winter heating season has propelled New York Harbor diesel fuel to its highest premium over Nymex futures in five months. Instead of paying this premium on the spot market, currently at 75 cents a gallon, more traders are planning on taking physical delivery of the fuel a week or two after contract settlement at the end of each month, according to traders.