Gasoline fell as an agreement to keep a refinery near Philadelphia operating eased concern that supply shortages will arise.
Prices sank even as crude oil rose after Delta Air Lines Inc. (DAL:US) subsidiary Monroe Energy LLC agreed to buy the ConocoPhillips (COP:US) refinery in Trainer, Pennsylvania. Conoco planned to shut the 185,000-barrel-a-day plant unless a buyer surfaced by the end of May.
“Gasoline is a little bit out of sync with the market,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “The refinery had been priced into the market as being closed permanently. That sends a bearish signal.”
Gasoline for June delivery fell 2.75 cents, or 0.9 percent, to settle at $3.0971 a gallon on the New York Mercantile Exchange. Gasoline has declined 8.6 percent since March 30, paring the 2012 gain to 15 percent.
Delta’s purchase of the Trainer plant is the first time an airline has purchased a refinery, JBC Energy said. Delta plans to start the facility in the third quarter, the researcher said.
Gasoline surged 26 percent in the first quarter as tension over Iran’s nuclear program boosted Brent oil prices and refineries serving the U.S. East Coast planned to close. Demand is near a 10-year seasonal low, Energy Department data show.
Gasoline also slipped after a gauge of British factory output declined and China’s manufacturing expanded less than forecast, adding to concern that demand would slow. The fuel pared declines after the Institute for Supply Management’s U.S. factory index beat expectations.
“We have a very tentative global economy,” said Peyton Feltus, president of Randolph Risk Management in Dallas. “Demand was already moving down before the price was moving up. The consumer didn’t need it and now they can’t afford it.”
U.S. drivers bought 8.65 million barrels of gasoline a day in the week ended April 27, down from 8.69 million the week before, according to MasterCard’s SpendingPulse report. Consumption stayed below year-earlier levels for the 35th consecutive week.
Crude oil for June delivery advanced $1.29, or 1.2 percent, to $106.16 a barrel in New York. Prices have climbed 7.4 percent this year.
Oil rose because of the ISM report and the move higher is “overdone,” Chirichella said. “Gasoline is probably a more realistic picture” of the energy complex, he said.
June-delivery heating oil fell 0.71 cent to $3.1771 a gallon. Prices have increased 8.2 percent this year.
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