Atlantic Coast ULSD differentials fell modestly Tuesday, and have not risen for the past six trading days as it narrows the spread to heating oil.
Platts assessed Atlantic Coast ULSD for Buckeye Pipeline at the NYMEX January heating oil futures contract plus 5.925 cents/gal, based on deals heard done at plus 6.50 cents/gal for the Buckeye Pipeline, pumping December 20, as well as a deal heard done for the Colonial Pipeline at plus 5.75 cents/gal in the 67th cycle, delivering December 24.
The assessment takes into account backwardation of approximately 20 points per day and the middle of the assessment window on December 23.
At 3:15 p.m. EST (2015 GMT), the NYMEX January contract was assessed at $2.9930/gal, up 3.10 cents. The contract settled at $2.9965/gal, rising 4.02 cents.
For New York Harbor barges, it was assessed at plus 5.85 cents/gal, down 40 points, based on offers for prompt barges heard at plus 6 cents/gal.
Regional differentials have not risen since December 10, when Platts assessed for Buckeye at plus 12.75 cents/gal and for NYH barges at plus 13 cents/gal.
"Diesel usually converges a lot closer to heating oil during the cold months," a trader said. "With New York State going to ultra low sulfur heating oil, they might not get as close to each other as usual."
USAC heating oil for Buckeye Pipeline was assessed at plus 0.75 cent/gal, down 15 points/gal, based on a deals heard done at that level for the Buckeye.
The ULSD premium to heating oil was 5.175 cents Tuesday.
The ULSD premium to heating oil averaged 7.052 cents in the trading days in December. In the comparable period in 2011, the premium averaged 4.575 cents.
Traders took the market structure into account to assess an arbitrage because it takes 15-20 days to ship on the Houston-to-New York Colonial Pipeline. The NYMEX February contract was backwardated by 26 points to the front month contract.
The USAC premium to USGC product, or "up-down," was 13.925 cents/gal, down 57.5 points. The shipping cost on the Colonial Pipeline was 4.509 cents. The premium was above Colonial's tariff for the 53rd straight trading day.
