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New York Harbor heating oil differential pops after multiyear low

Houston — The differential for high sulfur heating oil barges in New York Harborrebounded sharply Friday after reaching the lowest level in a number of yearson warm weather and overblending.

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S&P Global Platts assessed benchmark Atlantic Coast HSHO at the NYMEXMarch ULSD futures contract minus 18 cents/gal, compared with minus 21.75cents/gal on Thursday, the lowest differential since NYMEX switched itsfutures contract from heating oil to ULSD in spring 2013.

BP offered heating oil barges lower Thursday to NYMEX March ULSD minus21.50 cents/gal, with no buyers. But it was heard bid at minus 18.25 cents/galon a quiet Friday of trading in the Northeast, where many people had the sameforecast as given on Groundhog Day: a cold February.

"I guess somebody should have shot that groundhog. He missed the forecastagain," one trader said.

He noted another major use is for blending the 2,000 ppm sulfur gradeinto 500 ppm sulfur, or S500, heating oil. "And the demand for S500 has justfallen off the cliff. That's put added pressure on heating oil on a promptbasis," he said. "I wouldn't say it's warm there, but it's probably warmerthan suppliers would want to see. They may have overblended to start with."

"It all evens out," a second trader said. "We had that brutal coldstretch. Now we're having warm weather. There's no snow on the ground here."

US imports of Canadian heating oil have tapered off lately, with just oneship from Irving Oil unloading 95,000 barrels of heating oil in Maine thisweek, according to US Customs Bureau data. But Rolympus brought in 316,000barrels of gasoil into Connecticut on Wednesday from Russia that was likelyheating oil grade.

That could have helped pressure USAC heating oil to a rare parity withthe Gulf Coast on Thursday. Gulf Coast heating oil remained at NYMEX MarchULSD minus 21.75 cents/gal on Friday.

The first trader said New York should not be the same as the Gulf Coastbecause of Colonial Pipeline transportation costs of more than 5 cents/gal.

"But it can happen," he said. "It usually doesn't last very long. Butsupplies are great and you got a lot of barrels coming in and not muchdemand."

--Matthew Kohlman, matthew.kohlman@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com