US Cash Products-USG ULSD weak on low cargo demand

NEW YORK, July 25 (Reuters) - Ultra-low sulfur diesel in the U.S. Gulf Coast continued to weaken, despite weaker NYMEX benchmark futures as weak cargo demand depressed values, traderssaid on Friday.

In the Midwest, differentials perked up against the weaker NYMEX values, but outrights remained steady to lower, also due to sluggish demand.

"We are just entering a real lull in demand for this area of the country until the mid-September fall harvest gets under way," said one Midwest broker.

Colonial Pipeline froze nominations for cycles 42 and 43 on its distillate pipeline north of Collins, Mississippi.

The closure of the Mississippi River below New Orleans due to Hurricane Dolly may have forced some refiners to reroute fuel from barges to the pipeline, one broker said. [ID:nN25469777]

Colonial also announced a July 29 auction for storage space for diesels at its Woodbury Junction tank farm for six months.[ID:nN25256736]

In the New York Harbor, RBOB differentials moved up as sellers held back, hoping to boost prices.

"There are no containment issues. Tankage isn't full so no one is forced to sell," said one gasoline trader.

U.S. crude futures slipped on Friday as the dollar gained and an industry consultant estimated that OPEC's oil output will rise this month.[O/N] [O/R]

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

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Scheduling cycle 43 M2 gasoline on the Colonial Pipeline fell almost a penny to trade at 13.25 cents under the September RBOB screen before moving up to talk at 13.00/12.75 cents under.

Same cycle M1 traded at 9.50 cents under the screen before bids move up to 4.25 cents over M2.

Newly prompt cycle 43 ultra-low sulfur diesel slipped further to talk 1.25/2.25 cents over the over the September heating oil screen, with the offers seen a penny below Thursday's level.

Same cycle 74 grade was pegged at 2.75 cents under the screen.

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RBOB prices moved up as sellers were seen holding back in order to raise differentials out of the doldrums, traders said.

RBOB traded at 1.20 cents under the August RBOB futures, gaining a penny.

M2 values fell, with early August barrels down one and half cent to 11.25 cents under the screen.

Heating oil inched up a quarter point to 2.25 cents under the August screen.

Ultra-low sulfur diesel inched up half a cent to 8.00 cents over the over the August screen with low sulfur diesel unchanged from Thursday's level of 1.50 cents over.

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Group Three ultra-low sulfur diesel differentials gained 0.75 cent, trading at 3.75 cents against a weaker August heating oil contract, with outrights still lower than Thursday levels.

Chicago ultra-low sulfur diesel also gained 2 cents, trading at 6 cents under the September heating oil contract.

Gasoline in Group Three moved up half a cent, pegged at 6.25 cents under the August RBOB futures benchmark.

In Chicago, gasoline traded at 9.25 cents under the September RBOB board, losing 1.25 cents from Thursday levels.

(Reporting by Rebekah Kebede and Janet McGurty)