Bloomberg News

Gasoline Gains on Speculation EU May Ban Iranian Crude Imports

December 06, 2011

Dec. 6 (Bloomberg) -- Gasoline rose to a four-week high on speculation that the European Union may ban imports of Iranian oil, increasing the cost to produce fuel in Europe and the U.S. East Coast.

Prices gained after EU Energy Commissioner Guenther Oettinger signaled the bloc may have reached an agreement on whether to ban imports of crude from Iran. Refineries on the U.S. East Coast, where Nymex gasoline futures are delivered, primarily use oil priced versus London-traded Brent.

“If the EU were to ban those imports, that supply would have to come from elsewhere and that means more upward pressure on Brent,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for January delivery rose 3.17 cents, or 1.2 percent, to settle at $2.6454 a gallon on the New York Mercantile Exchange, the highest settlement since Nov. 8. Prices have gained 7.8 percent this year, and peaked at $3.4648 on April 29.

The contract reflects reformulated gasoline blendstock, or RBOB, delivered in New York Harbor.

The U.S. imported 619,000 barrels a day of gasoline in the week ended Nov. 25, Energy Department data show. That’s down 35 percent from a week earlier and the lowest level in six weeks.

Oettinger, asked in Doha, Qatar, if there was consensus for a ban, said, “I think so, yes.”

EU Sanctions

The EU agreed to tighten sanctions on Iran at a Dec. 1 meeting in Brussels while falling short of authorizing an immediate ban on Iranian crude imports amid reservations from Greece. The U.S. approved additional curbs on Iran’s oil industry on Nov. 21.

“Europe is saying there’s going to be a consensus to ban Iranian oil, but the question is when,” said Phil Flynn, vice president of research at PFGBest in Chicago.

European Union leaders and officials from the European Central Bank are poised to meet Dec. 8 and 9 in Brussels to try to resolve the region’s debt crisis that has led to bailouts of Greece, Ireland and Portugal. Greater confidence in the ability of European leaders to contain the debt crisis could boost the oil market and prospects for fuel demand.

“Everything is so fixated on the ECB meeting Thursday and the EU meeting on Friday and everything else is taking a back seat,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Gasoline Supplies

U.S. gasoline stockpiles probably rose a fourth consecutive time last week, increasing 875,000 barrels, according to the median estimate of 12 analysts in a survey by Bloomberg News. Distillate inventories increased 1.15 million barrels.

The Energy Department is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington.

U.S. gasoline demand rose 1 percent in the week ended Dec. 2 to a 14-week high as drivers refilled their tanks after the Thanksgiving holiday weekend, according to MasterCard Inc.’s SpendingPulse report today.

January-delivery heating oil rose 2.93 cents, or 1 percent, to settle at $3.0217 a gallon on the exchange. Prices have gained 19 percent this year and peaked at $3.3197 on April 8.

Regular gasoline at the pump, averaged nationwide, fell 0.1 cent to $3.275 a gallon yesterday, according to AAA data.

--With assistance from Anthony DiPaola in Dubai. Editors: David Marino, Dan Stets

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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