The heaviest vacuum gasoil in the US Gulf Coast cash market was cheaper than crude for a third consecutive day Wednesday, extending a bear run not seen since April 2010, with feedstock remaining in floating storage, sources said.

High-sulfur vacuum gasoil, or VGO at maximum 2% sulfur, rose 75 cents/b but remained cheaper than crude at cash April WTI minus 25 cents/b. It has been trading below crude all this week, reflecting pressure from cargoes that originated in Europe.

Several full cargoes of high-sulfur VGO remain unsold in the market, sources said.

"Europe is always oversupplied in VGO and is always exporting it to the US," a European feedstocks source said.

The last run of three days or more with high-sulfur VGO cheaper than crude came in the April 7-19, 2010 period. The Gulf Coast market came under pressure at that time from a large FCC offline at a refinery in the Caribbean.

Gulf Coast VGO has also come under pressure this year as a result of diesel and gasoline being less profitable.

The ULSD crack over region-dominant Louisiana Light Sweet crude has held below $10/b for 10 consecutive days. It was at $7.31/b Wednesday and is about $13/b below where it was at this time last year.

--Jeffrey Bair, jeffrey.bair@platts.com
--Ned Molloy, ned.molloy@platts.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.com

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