US Atlantic Coast high sulfur heating oil slipped to its lowest differential in more than a year on Monday, narrowing the spread between it and the US Gulf Coast.
Platts assessed USAC heating oil with up to 2000 ppm sulfur down 75 points to NYMEX November futures minus 15 cents/gal, bringing the outright assessment to $2.3199/gal, the lowest since $2.3015/gal on November 30, 2010. Differentials have not been weaker since August 5, 2013, when it was minus 16.25 cents/gal.
The Gulf Coast outright heating oil assessment also hit a low since 2010, as a differential that climbed 50 points to minus 22.75 cents/gal was unable to offset the falling NYMEX basis. The outright price was assessed at $2.2424/gal, the lowest since $2.2029/gal on November 23, 2010.
The spread from the USGC to the USAC narrowed to 7.75 cents/gal, still stronger than the 5 cents/gal cited by sources as the cost to ship. Blending economics on the USAC also appeared to be favorable, despite market talk that low sulfur heating oil -- which has less than 500 ppm sulfur -- was down to minus 5 cents/gal.
USAC ultra low sulfur heating oil, which must have a sulfur content of less than 15 ppm, slid to minus 3.25 cents/gal. This means that when it is blended with up to 2000 ppm sulfur heating oil at a 3:1 ratio, producers stand to make as much as 1.19 cents/gal on the blended product.
The NYMEX November futures contract was assessed at $2.4699/gal at 3:15 pm EDT (1915 GMT).
