US Cash Products-Midwest Group Three ULSD up on harvest

NEW YORK, Nov 6 (Reuters) - Group Three ultra-low sulfur climbed about a penny on Thursday amid strong agricultural demand against a weaker heating oil futures benchmark, traders said.

Harvest has been delayed by unfavorable weather in many Midwestern states. For instance, only 11 percent of corn in North Dakota was harvested by Nov. 2, compared to 73 percent for the same time last year and many other states have had similar delays. [ID:nAPI000532]

"Obviously, the demand has peaked in various terminals in the Midwest," said TEPPCO'S spokesman Rick Rainey.

"What we're seeing this year is usually high."

Earlier on this week, a spokesman for Magellan Midstream Partners LP (MMP.N) said some of its terminals were experiencing short-term outages of ultra-low sulfur diesel.

In the Harbor, demand for heating oil was thin. Heating oil stocks in the East Coast, PADD I, jumped by 5.5 percent last week, and as a result, the year-on-year deficit narrowed to 21.4 percent, Stephen Schork, editor of The Schork Report, said, citing government data issued on Wednesday.

Unseasonably warm temperatures in Northeastern states are keeping demand thin for the heating fuel while ample supplies hit the hub from the Gulf Coast.

"Needless to say, the inventory situation in the East is still tight," Schork said, as supplies are below year ago levels. "But, on the other hand, the NYMEX heating oil term structure has hardly budged. In other words, constraints aside, futures traders are not concerned regarding supply."

U.S. crude futures dropped $5 per barrel on Thursday amid worries that a slowing global economy will pressure demand. Benchmark December heating oil and gasoline futures also slipped, with heating oil down about 10 cents and RBOB falling about 8 cents. [O/N]

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

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Scheduling cycle 63 heating oil on the Colonial Pipeline was offered at 5.50 cents under the December heating oil futures screen, but warm weather in the Northeast heating oil market and shipping restrictions set bids at 7.75 cents under.

"A wide box. That's why it's so quiet," said one heating oil trader.

Other distillates were seen in range with newly prompt cycle 63 61-grade ultra-low sulfur diesel trading at 0.25 and 0.50 cents over the screen with anys pegged at 0.50 cents under to flat to the Merc.

Same cycle 74 grade was up slightly on a weaker screen, trading at 4.50 cents under the screen.

Prompt M4 conventional gasoline traded at midday at 4.00 cents under the NYMEX RBOB futures screen, after earlier trade at 4.50 cents and 3.25 cents under.

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Prompt heating oil was offered at December futures minus 2.00 cents, unchanged from Wednesday's levels, with bids coming in at 2.25 cents under the print, traders said.

Among other distillates, ultra low sulfur diesel was set flat at 7.50 cents over the print and low sulfur fell half a cent at 2.00 cents over. But jet fuel inched up about a penny and a half at 11.50 cents over and kerosene was put at 15 cents over.

Prompt regular conventional gasoline was notionally valued lower with demand virtually nil in the early going. Traders said M4 was valued at 5.00 cents over the print or less, down one to two cents. Traders said F grade reformulated was still valued around +7 for very prompt but for barrels by Nov. 10 it falls to about 4.00 to 5.00 cents over on the offer side.

"There's nothing trading, it's very quiet.... I would love to sell gasoline at +5, grade M4 or M5," a trader said, adding he was even skeptical of notional values being quoted.

"I have not traded premiums in two weeks," he added.

"It's 7.00 on F but by (November) 10th, it goes to 4.00," a second Harbor trader said.

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Group Three ultra-low sulfur diesel moved up about a penny, trading at 3.60 cents over December heating oil futures.

In Chicago, the grade was steady at 2.50 cents over the board.

Group Three gasoline differentials were steady, pegged at a penny under December RBOB futures. (Reporting by Rebekah Kebede, Janet McGurty, and Haitham Haddadin)