OTTAWA: Prices for heating oil and diesel fuel traded on the U.S. East Coast are scaling multimonth highs, bolstered by unusually cold weather across the country and a surge in export demand, particularly from Brazil and Canada.
The jump in prices has given a lift to refiners during what is typically a lull in activity for them. Refineries typically reduce output and do maintenance between winter and summer peak demand periods.
This year, they have kept processing high to take advantage of profit margins at their highest levels for the time of year since 2015. The profit they can make for producing distillates HOc1-CLc1 – a group of fuels that includes diesel and heating oil, and one of the key measures for refinery margins – reached a three-year high for April of $21.73 on April 11.
Latin American buying has helped drive strong export flows and bolster refinery margins. Overall U.S. fuel exports of refined products reached a record 3.3 million barrels a day in 2017, according to the U.S. Energy Information Administration – triple that of U.S. crude exports.
Demand is expected to remain robust due to ongoing refinery outages in Latin America and maintenance work in Canada, market participants said.
About half of those exports are headed to Brazil, Smith said, adding that demand for products such as heating oil and ultra-low-sulphur diesel (ULSD) has been high in that country.
