Gasoline rose on concern that refinery shutdowns in the U.S. East Coast will tighten supplies as demand rises heading into the peak summer driving season.
The motor fuel reached an 11-month high before paring gains as oil dropped to a six-week low on speculation that U.S. and European nations are nearing an agreement to release emergency crude oil supplies.
“Concern in the gas market is that as we get closer to the driving season the refinery closures makes the market jittery,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Gasoline for April delivery rose 0.51 cent to settle at $3.4006 a gallon on the New York Mercantile Exchange. Prices are up 27 percent this year, making the fuel the best performer in the Standard & Poor’s GSCI commodity index.
April futures touched $3.4455, the highest intraday level since April 29, after an Energy Department report yesterday showed demand for the motor fuel increased last week. Sunoco Inc. (SUN:US) and ConocoPhillips (COP:US) have shut two plants in Pennsylvania and Sunoco may to idle a third by July that together could process more than 700,000 barrels a day of oil. Supplies of the motor fuel along the East Coast were at an 11-week low as of March 23.
Prices retreated as crude dropped the most since Dec. 14 after French Prime MinisterFrancois Fillon said the prospects of an accord to release strategic oil reserves are good. Oil for May delivery on the exchange sank $2.63, or 2.5 percent, to $102.78 a barrel.
The potential release of crude reserves “represents a bearish impact on the physical market,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.
Gasoline contracts for May delivery fell 2.24 cents, or 0.7 percent, to $3.3397. April gasoline and heating oil contracts will expire at the close of floor trading tomorrow. April’s premium over May increased to 6.09 cents, the largest gap between the contracts nearest to expiration since October.
Deliveries (DOEDMGAS) to wholesalers increased 4 percent from the prior week to 8.71 million barrels a day, the highest level since December, according to department data. Demand over the past four weeks was 6.1 percent below a year earlier.
Gasoline supply in the East Coast, or Padd 1, fell 1.81 million barrels to 58.7 million, the lowest level since Jan. 6. Padd 1 includes New York Harbor, the delivery point for Nymex contract for reformulated gasoline blendstock, or RBOB.
Supplies may shrink further as imports fail to make up for production from the shuttered refineries. Shipments (DOEIGAS1) to the East Coast from abroad dropped to 496,000 barrels a day last week, the lowest level for this time of year since at least 2004, department data show. Cargoes of the fuel from Europe to the U.S. may slip to a seven-month low, Bloomberg News surveys show.
Traders and oil companies booked or probably will hire 17 tankers on average during a 14-day forward period for each week this month, according to median estimates in surveys of shipbrokers, traders and owners.
The shipments are set to fall as inventories of gasoline in northwest Europe rose to the highest level since 2008. The crack spread, or premium to Brent crude, for Eurobob rose to $16.93 a barrel as of 5:21 p.m. London time, according to data from PVM Oil Associates Ltd., a broker. That’s the highest level since Sept. 12, 2008.
April-delivery heating oil fell 4.9 cents, or 1.5 percent, to $3.1589 a gallon on the Nymex. Prices have gained 7.6 percent this year. The May contract slipped 5.24 cents, or 1.6 percent, to $3.1698.
Regular gasoline at the pump, averaged nationwide, rose 1 cent yesterday to $3.921, according to AAA, the nation’s biggest motoring club. Prices are 9.3 percent above a year earlier.
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