Thin diesel stockpiles lift Chicago prices

Diesel demand in the northeast portion of the US midcontinent increased today, as lower stockpiles of ultra-low sulphur diesel (ULSD) in Ohio prompted prices at the Buckeye Complex and Wolverine Pipeline to fetch premiums to the January Nymex ULSD contract for the first time in nearly eight weeks.

Wolverine Pipeline ULSD traded between a 2¢/USG and 3.5¢/USG premium to the Nymex today, causing prices to flip from yesterday's 3.75¢/USG discount for the first time since early October.

ULSD prices at the Buckeye Complex in Hammond, Indiana, similarly rose to a 3¢/USG premium to the Nymex after holding a 5.25¢/USG discount in the previous session.

This reopened arbitrage economics from the US Gulf coast for the first time since 7 October, with Buckeye Complex ULSD holding an 8.4¢/USG premium to Gulf coast Colonial Pipeline prices.

Market participants said prices rose on the back of low inventories in Ohio. Earlier this month, Cincinnati, Ohio, officials directed municipal departments to take measures to conserve the city's ULSD supply following prolonged refinery maintenance at two Ohio refineries — Marathon Petroleum's 93,000 b/d refinery in Canton and Cenovus Energy's 175,000 b/d refinery in Lima, Ohio.

US midcontinent ULSD stockpiles were the lowest since March the week ended 19 November, with inventories falling by 4.9pc to 25.4mn bl from the prior week, according to the most recent data from the US Energy Information Administration (EIA). This came even as regional ULSD production rose by 4.7pc to 1.2mn b/d.

Elsewhere in the Chicago region, West Shore/Badger pipeline ULSD prices held a 0.25¢/USG discount to the Nymex today, narrowing the spread by 4¢/USG from yesterday.

By Jared Ainsworth