09 December 2011 17:59 [Source: ICIS news]
HOUSTON (ICIS)--Sellers dropped the value of US vacuum gas oil (VGO) on the spot market in efforts to liquidate high-priced inventory before the end-of-year taxes, said spot traders on Friday.
“Woe to he who needs to sell,” said a Gulf coast VGO trader. “There’s little to no VGO demand.”
VGO is the feedstock for the gasoline-making unit at refineries.Inventory managers for refiners are keeping their buyers on the sidelines to prevent adding supply to storage, the trader said. Inventory, or assets, the refiner owns at the end of 2011 are subject to capital gains taxes.
Sellers were offering VGO at a lower premium in an effort to entice buyers.
The sellers still in the market have dropped low-sulphur VGO to a premium of $15.50/bbl over the price of West Texas Intermediate (WTI) crude, down $2/bbl from last week. WTI crude futures for January were at $98.27/bbl on Friday morning, down 7 cents/lb from the previous day.
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