The Atlantic Coast ULSD differential surged Thursday, with most of the runup occurring during afternoon trading.
Platts assessed Atlantic Coast ULSD for Buckeye Pipeline at the NYMEX January heating oil futures contract plus 8.75 cents/gal, up 3.50 cents, based on bids heard at plus 8.50 cents/gal off the Colonial Pipeline in the 64th and 65th cycles.
At 3:15 p.m. EST (2015 GMT), the NYMEX January contract was assessed at $2.9376/gal, down 5.23 cents. The contract settled at $2.9432/gal, falling 4.75 cents.
"The run up has nothing to do with the NYMEX heating oil contracts stabilizing in the afternoon," a trader said.
The differential ran up very quickly over the course of a short amount of time, he said.
At 1 p.m. EST (1800 GMT), ULSD for Buckeye Pipeline was pegged at plus 6.50 cents/gal. By 2:35 p.m. EST, it was pegged at plus 8.75 cents/gal.
The outright price of ULSD for Buckeye Pipeline was assessed at $3.0251/gal, the lowest price since August 2, when it was at $2.9539/gal.
For New York Harbor barges, it was assessed at plus 9 cents/gal, up 3 cents, based on market sources pegging it at that level.
"Guys are bidding for barges with nothing in the tank," a second trader said. "Offers went off the table and we are waiting for Colonial to deliver."
The next shipment into Linden, New Jersey, off the Colonial Pipeline occurs on December 8 in the 64th cycle.
Traders also took into market structure into account to assess an arbitrage because it takes 15-20 days to ship on Colonial. The NYMEX February heating oil contract was in contango by 64 points/gal to the front-month contract.
The USAC premium to USGC product, or "up-down," was 10.35 cents/gal, up 3.60 cents, which is the lowest level in more than two months. The premium was above the shipping tariff for the 44th straight trading day.
