Bloomberg News

Gasoline Futures Slide as Stockpiles Rise the Most Since January

December 07, 2011

Dec. 7 (Bloomberg) -- Gasoline fell to a four-day low after the Energy Department reported that stockpiles rose last week the most in 10 months and demand declined.

Futures sank as inventories jumped 5.15 million barrels to 215 million, the biggest increase since the week ended Jan. 28. Analysts projected a gain of 875,000 barrels, according to the median estimate of 12 analysts in a survey by Bloomberg News. Demand, or deliveries to wholesalers, slipped 2.2 percent to 8.57 million barrels a day, the lowest level in five weeks.

“A 5 million-barrel build in the middle of winter is bearish by any measure,” said Sander Cohan, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts.

Gasoline for January delivery fell 5.85 cents, or 2.2 percent, to settle at $2.5869 a gallon on the New York Mercantile Exchange. Futures have gained 5.5 percent this year.

The biggest increase in inventories was on the East Coast, where stockpiles rose 2.6 million barrels to 57.2 million. Imports in Padd 1 jumped 59 percent to 761,000 barrels a day while refinery rates slipped 2.2 percentage points to 64.4 percent.

U.S. demand for the motor fuel during the past four weeks was 3.5 percent below a year earlier. The four-week average of total fuel supplied was 2.8 percent below 2010.

“What’s real negative about the report isn’t the builds, it’s the demand,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “And total demand being down 2.8 percent, that’s a number that should get people’s attention.

Gasoline Production

Gasoline production fell 0.7 percent to 9.13 million barrels a day. Refiners increased overall rates 3.1 percentage points to 87.7 percent, the highest level in nine weeks, as plants completed repairs.

‘‘Seasonally you’d expect the increase, but it’s not sustainable if demand is weak,” Pursell said.

Demand at the pump fell below a year earlier for the 14th consecutive time, dropping 4 percent last week from 2010 levels, according to MasterCard Inc.’s SpendingPulse report yesterday. Measured on a four-week average, consumption was 4.2 percent below a year earlier, the 37th consecutive decline in that measure.

“Gasoline is continuing its trend with lower demand and we’ve seen that throughout 2011,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Distillate Supplies

Stockpiles of heating oil and diesel rose 2.53 million barrels last week to 141 million, a five-week high, as production reached a record high for the second straight week. Output jumped 4.3 percent to 5.03 million barrels a day, the report showed.

Demand for distillate fuels surged 21 percent to 3.92 million barrels a day, after falling the prior week to the lowest level since August 2009. On a four-week average, consumption was 3.4 percent higher than a year earlier.

January-delivery heating oil fell 3.93 cents, or 1.3 percent, to settle at $2.9824 a gallon on the exchange, the first decline in four days. Prices have gained 17 percent this year and peaked at $3.3197 on April 8.

Regular gasoline at the pump, averaged nationwide, rose 1.1 cent to $3.286 a gallon yesterday, according to AAA data.

--Editors: David Marino, Bill Banker

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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