Gasoline fell on concern that a surge in retail prices will reduce fuel demand and as crude oil retreated after an official said the U.S. is considering a release of strategic petroleum reserves.
Futures declined as regular gasoline at the pump has surged 19 percent this year and is 8.7 cents below 2011’s peak of $3.985 on May 4, according to AAA, the nation’s biggest motoring group. Charles McConnell, the Energy Department’s acting assistant secretary of fossil fuels, said the U.S. is weighing a release in response to potential supply restrictions.
“Gasoline has had such an incredible run but now there’s some concern that high prices are going to hurt demand,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Gasoline for April delivery fell 1.1 cents, or 0.3 percent, to settle at $3.4056 a gallon on the New York Mercantile Exchange, the first loss in three days. The more actively traded May contract fell 1.23 cents to $3.3864 a gallon.
Gasoline has surged 27 percent this year, making it the best performer in the Standard & Poor’s GSCI index of 24 commodities.
Prices also declined on speculation that ConocoPhillips restarted a fluid catalytic cracker at its 238,000-barrel-a-day Bayway refinery in Linden, New Jersey, after an upset yesterday. The plant is located along New York Harbor, the delivery point for Nymex gasoline contracts.
“The Bayway cat cracker outage was only for a day and not an extended period of time,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Along the U.S. East Coast, Sunoco Inc. (SUN:US) and ConocoPhillips last year idled money-losing refineries in Pennsylvania with a combined capacity of 363,000 barrels a day, or 24 percent of the region’s capacity, according to the Energy Department. Sunoco has said it will shut its 335,000-barrel-a-day Philadelphia refinery by July unless it can attract a buyer.
Retail demand this year through March 23 was 5.6 percent below the same period in 2011, according to MasterCard Inc.’s SpendingPulse report today. That’s the biggest decline for this time of the year in SpendingPulse records, dating back to 2004. Demand has been below year-earlier levels for 30 consecutive weeks and the four-week average has fallen a record 53 weeks.
“We don’t have any material improvements in gasoline demand and it may have crested at a 10-month high,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Unless demand improves, it will have trouble charting at higher levels.”
Gasoline inventories probably dropped a sixth consecutive time last week, losing 1.55 million barrels to an 11-week low, according to the median estimate of 12 analysts in a survey by Bloomberg News. Distillate supplies fell 500,000 barrels, according to the survey.
Heating oil for April delivery declined 1.02 cents, or 0.3 percent, to settle at $3.2186 a gallon on the Nymex. Prices have gained 9.7 percent this year. The May contract slipped 1.05 cents to $3.236.
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