Marine Gasoil on East Coast Surges as Frigid Weather Pressures Diesel Market Higher

Marine gasoil on the U.S. East Coast has surged with the region’s cold weather, OPIS data show.

During a cold snap, natural gas supply is curtailed to large industrial users, with residential home heating as well as schools, hospitals and other priority users receiving natural gas. Diesel is used in place of natural gas and at times can push prompt natural gas prices higher.

On Jan. 20, NYMEX front-month ULSD futures settled at $2.3385/bbl , or about $732 per metric ton. At the same time, OPIS assessed New York Harbor MGO at $726 per metric ton ex-wharf.

During the next four trading days, NYMEX ULSD futures by Monday jumped 22.95cts/gal, or the equivalent of about $72/mt. Concurrently, MGO in New York Harbor was assessed $67/mt higher to $793/mt.

“Natural gas is at a premium to heating oil,” said one East Coast bunker supplier. “Power plants using heating oil to generate electricity is driving up heating oil premiums.”

The cold snap shows no signs of relenting and diesel prices should remain elevated and keep MGO pricing strong.

Reporting by Tom Sosnowski, tsosnowski@opisnet.com; Editing by Eric Wieser, ewieser@opisnet.com and Michael Kelly, mkelly@opisnet.com