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(Bloomberg) — US diesel futures are surging ahead of benchmark European contracts as a winter storm, followed by continued frigid temperatures, piles pressure on the country’s fuel market.
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New York Harbor diesel’s premium to European futures surpassed 40 cents a gallon on Monday, the highest level in over three years and continues to hover around that marker, according to fair value data compiled by Bloomberg. The huge storm has impacted some US refinery operations as the icy temperatures support demand for heating oil, a diesel-type fuel.
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“It’s the cold weather in the US northeast which has triggered a spike in prices in New York,” said Natalia Losada, an oil products analyst at Energy Aspects. Once the cold snap is over, “there’s room for this spread to correct a little,” she said.
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Several US plants, including ExxonMobil’s Baytown mega refinery and Goodyear’s Bayport chemicals facility, curtailed operations Saturday ahead of the freeze. The waterway connecting Houston’s refineries to crude imports and global export markets for their products also closed Saturday, partially re-opening Monday morning.
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The freeze has “threatened Midwest US refinery production,” said James Noel-Beswick, head of commodities at Sparta. Diesel stockpiles have also been seasonally low in parts of the country, and the imminent start of a heavy US Gulf coast refinery turnaround period hasn’t helped, he added.
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The northeast — where the majority of the nearly 5 million households that used heating oil as their main heating fuel in the 2023-2024 winter were located — experienced the heaviest snowfall during the recent storm.
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—With assistance from Nathan Risser.
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