Growth in consumption is good news for refiners
Paul Burkhardt -
THESTAR - June 28, 2010
More demand for goods means more goods being transported. On this account, the trucking industry is not complaining especially with falling prices for the ultra low sulphor Dielsel fuel. --Ed.
U.S. diesel demand is rising at the fastest pace in five years as the economy expands and truckers haul more goods, boosting profits for refiners.
Use of the fuel in the four weeks ended June 11 increased 12 per cent from the previous year, the Energy Department said June 16. About 9.6 per cent more freight moved by road in April than in the same period of 2009, according to the American Trucking Association. Refiners earned $12.23 a barrel on June 18 turning crude oil into diesel and other distillates, more than double levels of a year ago, according to futures market data.
Given the trend were seeing, we would expect diesel demand to contribute to a larger proportion of oil-demand growth, said Costanza Jacazio, a commodities analyst at Barclays Capital in New York.
Ultra-low-sulfur diesel, the grade used by trucks, dropped 1.85 cents to $2.1854 a gallon (U.S.) on June 18 in the New York harbor market, trimming the 12-month gain to 17 per cent, according to data compiled by Bloomberg. Crude oil has gained 8.1 per cent over the same period to $77.18 (U.S.) a barrel on the New York Mercantile Exchange.
Consumption of U.S. distillates will expand 1.4 per cent to 3.68 million barrels a day this year, the largest annual increase since 2005, the Energy Department forecast on June 8.
While deliveries rose 7.8 per cent in May from a year earlier, shipments were still 20 per cent below the peak in February 2007 of 4.6 million barrels a day, according to a June 18 report from the American Petroleum Institute in Washington. Deliveries averaged 3.7 million barrels a day last month, the second-lowest level for May since 2003....
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