The Gulf Coast heating oil differential fell 75 points Wednesday as US production and stocks increased and traders cited trouble finding ships to move any export barrels.
Platts assessed the Gulf Coast heating oil differential at NYMEX August ULSD futures minus 17 cents/gal, dropping 75 points on top of a similar decline the day before.
Traders continued to say exports of heating oil remained strong, especially with Argentina seeking nine cargoes over a two-to-three-week period.
Heating oil barrels remain hard to find as US refiners make less of the grade due to regulatory reasons, sources said. The difference this week, they said, is that ships to transport any cargoes are just as hard to find.
Freight rates have risen to near-record levels out of the US Gulf Coast to Europe, while flat rates for Gulf-Caribbean runs are $900,000, or roughly double the average, one shipper said.
"Freight has gone completely nuts," he said.
A US trader said heating oil prices may be declining to offset the higher freight rates and entice buyers for export.
US Energy Information Administration released data early Wednesday showed heating oil production rose to 225,000 b/d for the week ending June 28, up from a record low output of 190,000 b/d the week before.
Production still remained 45.7% lower than the same week last year, as refiners focus more on ULSD due to regulatory concerns about sulfur levels.
US stock levels rose to 15.625 million barrels from last week's near-record low 14.95 million barrels. East Coast stocks increased 412,000 barrels to 9.72 million barrels and the Gulf Coast rose 265,000 barrels to 4.29 million barrels.
Platts had a 12:30 p.m. EDT close to its MOC process, and assessed the NYMEX August ULSD futures contract at $2.9600/gal, up 5.73 cents.
