Diesel output and stocks started to fall in late March, with the result that prices started to rebound.

Meantime, in major diesel spot and futures markets around the world, here’s what happened last week:

New York spot ULSD rose to $1.52/gallon as crude began to rebound. Diesel’s short-lived discount to gasoline has disappeared, as New York spots showed.

Platts Diesel & Distillates conference takes place in Houston, May 14-15, and is sponsored by Hart’s Diesel Fuel News.

Attendees will learn about:

• Market outlook for diesel relative to the rest of the barrel;

• How refiners are adjusting operations to increase diesel capacity.

Joining a parade of catalyst and refinery technology vendors aiming to help refiners boost diesel output and cut surplus gasoline, BASF Catalysts announced March 25 the commercial launch of ”HDXtra” catalyst.

The catalyst, combined with optimized operating conditions, enables refiners’ to increase light-cycle oil yield up to a 10% volume increase, “with nearly half of the benefit attributable to catalyst selectivity,” BASF said.

While ultra-low sulfur diesel (<15-ppm ULSD) has become the overwhelmingly dominant diesel fuel in North America – and will replace almost all other U.S. diesel by mid-2010 – attractive marketing to motorists is still lacking in the U.S. retail market.

One good example of this comes from a long-time Diesel Fuel News source that recently drove a brand-new, ultra-low-emissions Jetta TDI diesel car from Washington, D.C., to Boston.

“How about a story about the laggards at the retail level, from the consumer perspective?” this source suggested to us.

ASTM’s “E” (diesel fuel) subcommittee is balloting proposed changes to the D4737-04 test method for calculated cetane index by the “four variable equation.”

Rationale for the proposed change: Introduction of ultra-low sulfur diesel (ULSD) grades since the last test update, and a proposed exclusion of biodiesel blends for this test.

Calgary-based Connacher Oil & Gas this month reported a profitable 2008 despite wild crude-oil price swings and consequent negative impact on its 9,500 bbl/d heavy oil refinery, located in Great Falls, Montana.

The refinery “made respectable progress through a challenging economic period in 2008,” Connacher said.

While the mystery continues over whether certain types of ULSD are to blame for deposits in diesel common-rail injectors, one of the world’s biggest diesel fuel additives makers is touting what it calls “Greenclean” detergent.

Syntroleum announced March 16 that it received $13 million in technology transfer down payments, sufficient to fund operations and equity required to complete the “Dynamic Fuels” renewable diesel project in Louisiana.

“The Dynamic Fuels Geismar [La.] facility remains on budget and on schedule for mechanical completion by the end of 2009 and plant start-up beginning in early 2010,” Syntroleum said.

Volvo Trucks touted its urea-selective catalytic reduction (SCR) system over exhaust gas recirculation (EGR) for 2010 U.S. EPA heavy-duty diesel nitrogen oxides (NOx) and particulate matter (PM) emissions limits, claiming better fuel economy and no ”active” diesel particulate filter (DPF) regeneration.

”In-cylinder methods to decrease NOx for EPA 2010, such as massive EGR, reduce fuel economy while also being incompatible with passive DPF regeneration,” Volvo said.

Engine and automakers would be partly encouraged and partly discouraged by the global diesel fuel qualities discovered in the latest Infineum Worldwide Diesel Fuel Quality Survey.

The survey, done in 2008, includes 256 samples from 39 countries in winter months.

On the upside: Sulfur reduction in diesel fuel is making progress in much of the world. “This year, over two-thirds of the countries surveyed produced diesel with an average of less-than 50-ppm sulfur, and even more impressively, almost half of the countries surveyed averaged less than 15-ppm,” Infineum found.

Navistar announced that it will reaffirm its profit guidance for fiscal 2009 “despite projections of a continued weak domestic [U.S.] truck market.

Because of sagging fuel prices and the high cost of meeting California “zero-emissions” vehicle offset requirements, Nissan may postpone its plans for a diesel-powered Maxima sedan in the North American market.

“We haven’t reached a decision on the diesel yet, but we have to consider where we want to put our capital investments,” Automotive News quoted Larry Dominique, North American vice president for product planning, as saying. “We have to consider that the market for diesels will be too small to warrant the investment right now.”

Neste Oil announced it’s taking hydrotreated vegetable oil (“HVO”) sulfur-free renewable diesel into the Alliance for Synthetic Fuels in Europe – a group that until now only promoted Fischer-Tropsch gas-to-liquids (GTL) and biomass-to-liquids (BTL) diesel.

Idemitsu Kosan Co. announced development of an absorbent that removes sulfur from diesel, enabling hydrogen extraction for fuel cells.

According to a Nikkei news service report, “the company will now work with automakers to develop a diesel reformer that can be attached to large vehicles like trucks and trailers. This would enable diesel oil to be used both as the engine fuel and as the hydrogen source for fuel cells.”

Liquid-fuels conversion of just a part of the trillions of barrels of oil shale in the U.S. and elsewhere might go a long way toward reducing dependence on crude oil from unstable nations, while helping to meet growing middle distillate demand.

But critics point to potentially huge impact on water resources or other land-use environmental problems with oil-shale development, as occurred with the first oil-shale schemes of nearly 30 years ago.

In a joint statement released during the Mid-American Trucking Show this month, the North American SCR Stakeholders Group claimed that urea-selective catalytic reduction (SCR) is the “only solution” to meeting U.S. EPA 2010 diesel heavy-duty highway trucking limits on nitrogen oxides (NOx.).

The claim contradicts Navistar’s plan to use exhaust gas recirculation (EGR) for 2010 NOx limits rather than SCR.