Gasoline retreated on speculation that prices rose too fast in the longest rally since July 2009 and as oil fell on concern that a rise in U.S. jobless claims signals weaker economic growth and stagnant fuel demand.
Futures declined for the first time in 11 days, after jumping 12 percent since Jan. 15 as refinery repairs and a pending plant closing may reduce East Coast supplies. Crude declined after the Labor Department reported an increase in unemployment claims for last week. Gasoline demand is 0.6 percent below the five-year average, government data show.
“The 10-day rally factored in the offline production we’re expecting to see in the coming months and now it might be overextended,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Now we need to see that coupled with higher demand to push higher.”
Gasoline for February delivery fell 4.87 cents, or 1.6 percent, to $2.99 a gallon at 10:26 a.m. on the New York Mercantile Exchange.
Volume was 71 percent above the 100-day average for the time of day. The more actively traded March gasoline declined 3.68 cents to $2.9964 a gallon. February gasoline and heating oil contracts will expire at the end of floor trading today.
Prices are up 6.3 percent this month, headed for the biggest monthly increase since September. Gasoline is the fourth-best performer on the Standard & Poor’s GSCI commodity index this month, after cotton, nickel and gasoil.
The gasoline crack spread, based on March contracts, slipped 71 cents to $28.74 a barrel after reaching the highest level since October.
Futures also fell today as March crude on the Nymex declined 79 cents to $97.15 a barrel after the jobs report and as crude inventories rose by 5.9 million barrels to 369.1 million, according to Energy Information Administration data.
“Crude is under pressure as we have a lot of crude inventories,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The weekly jobs report showed a pretty significant increase in unemployment claims.”
Total U.S. gasoline inventories fell 956,000 barrels to 232.3 million barrels in the seven days ended Jan. 25, according to EIA data. Supplies in PADD 1 increased 1.24 million barrels to 55.2 million as imports to the region rose 47 percent to 609,000 barrels a day, the most since the week ended Sept. 7.
Philadelphia Energy Solutions began shutting the Girard Point section of its plant yesterday, the largest near the New York trading hub, for 60 days of work. A fluid catalytic cracker at Delta Airlines Inc. (DAL:US)’s Trainer, Pennsylvania, refinery has been shut for repairs since December.
Hess Corp. said the 70,000-barrel-a-day Port Reading refinery in New Jersey will be shut because it has lost money in two of the past three years.
“Cooler heads are prevailing today,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “If supplies are tight, why did they rise in the New York Harbor?”
Heating oil for February delivery fell 0.97 cent, or 0.3 percent, to $3.1076 a gallon, after settling yesterday at the highest level since Oct. 19. Volume was 4 percent below the 100- day average for the time of day. Futures have risen 2.1 percent this month, the largest increase since August.
The more actively traded March contract declined 1.16 cents to $3.0971 a gallon.
The retail price for regular gasoline, averaged nationwide, rose 2.9 cents to $3.423 a gallon, the highest level since Nov. 25, AAA said today on its website. Prices at the pump have climbed for 14 straight days.
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