US Cash Products-NYH ULSD up as refiners said cutting output

NEW YORK Jan 15 (Reuters) - Ultra-low sulfur diesel rose half a cent on Tuesday in the New York Harbor, adding to recent gains amid market talk some refiners are curtailing its production due to poor margins, traders said.

"Refineries cut back on (ULSD) production," a local distillates trader said, citing two major East Coast refiners.

"The spread came in too much. No. 2 oil (heating oil) and ULSD values came in too much so was too expensive to make ULSD so they increased No. 2 oil production," he added.

Other traders cited similar talk but were not clear which region was impacted or if the reported cuts were countrywide.

Heating oil values rose marginally for a second day running in the Harbor in anticipation of higher demand due to snowfall in the U.S. Northeast, the largest consumer of the fuel, and a forecast drop in temperatures this coming weekend.

Industry watchers say generally low Gulf Coast prices make ULSD flow workable to Northwest Europe, where values for distillate prices rose as some simple refiners were seen cutting runs due to poor margins. [ID:nL14465619]

In other hubs east of the Rockies, gasoline continued to weaken in the U.S. Midwest as demand drops.

U.S. crude oil futures fell more than $3 per barrel as mounting economic concerns pulled crude prices back after they had risen Monday.

For NYMEX reports click [O/N].

For a list of refinery outages, click [REF/US].

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Cycle 4 ultra-low sulfur diesel 61-grade traded at 2.25 cents under, gaining about a penny from Monday's levels, after earlier trades as low as 3 cents under.

Traders reported that less 61-grade was seen offered, boosting prices.

Same cycle 74-grade was pegged at 4/3.75 cents under, holding previous levels.

Scheduling cycle 5 M4 gasoline traded at 7.75 cents under February futures, losing about 0.50 cent from Monday's levels.

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Adding to its gains since Friday, ultra-low sulfur diesel offers rose to 3.00/3.50 cent over futures, up from 2.75 cents over futures. Traders attributed the gains to a dearth of immediate supplies as East Coast refinery reduce ULSD output.

Heat oil gained a little following with some snow fall in the U.S. Northeast, with barges at 0.35 cent under, up from 0.50 cent under the print on Monday. Weather forecasts call for below normal temperatures next Saturday in the Northeast.

Low sulfur diesel was flat at 0.50 cent over, while jet fuel inched up a quarter cent to 11 cents over futures, while kerosene lost a penny at 15 cents over.

On the gasolines, M5 regular was largely unchanged trading at 2.50 cents under futures for barrels by Jan 25th. Prompt F5 RBOB rose about a quarter cent, trading at a discount of 3.75 cent to futures.

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Chicago gasoline values remained weak on Tuesday, with differentials for cycle 3 pegged at 20 to 18 cents under the February RBOB print.

In Group Three, gasoline differentials dropped about 1.5 cents, trading at 8.50 cents under the board.

Ultra-low sulfur diesel was bid at 2 cents under the February heating oil board in Group Three, up about 0.50 cent from Monday, while in Chicago, the fuel was pegged at 4.50 cents under futures. (Reporting by Haitham Haddadin and Rebekah Kebede)