Bloomberg News

Gasoline Crack Spreads Narrow Amid Ample East Coast Inventories

May 02, 2013

Gasoline crack spreads narrowed for a second day after the government reported U.S. East Coast stockpiles of the motor fuel increased to the highest level in more than a year.

The fuel’s premium over June West Texas Intermediate slipped 82 cents to $22.36 a barrel. The spread to Brent weakened 83 cents to $13.43. The Energy Information Administration said yesterday gasoline inventories in PADD 1, which includes the New York Harbor delivery point for futures contracts, grew 1.18 million barrels last week to 61.7 million, the highest level since March 9, 2012.

“Gasoline futures are going to remain under pressure due to the high inventories in New York and the anticipated arrivals from Europe as refineries over there return from maintenance,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for June delivery fell 0.42 cent to $2.7151 a gallon on the New York Mercantile Exchange at 9:41 a.m. on volume that was 19 percent above the 100-day average.

Inventories of reformulated gasoline to be blended with ethanol, or RBOB, in PADD 1, which is the grade delivered against Nymex futures, rose 759,000 barrels to 21.8 million barrels.

“I expect that crack spreads are going to remain under pressure,” Lipow said. “We saw a significant number of gasoline cargoes diverted away from New York Harbor toward the Gulf Coast. That’s indicative of high inventories in New York.”

Ultra-low-sulfur diesel for June delivery gained 2.13 cents, or 0.8 percent, to $2.8102 a gallon on the Nymex. Trading volume was 17 percent below the 100-day average.

Gasoline at the pump, averaged nationwide, rose 0.3 cent to $3.525 a gallon, AAA said on its website today.

To contact the reporter on this story: Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: David Marino at dmarino4@bloomberg.net


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