Gasoline pared gains after a report that U.S. refiners processed the most crude in six months, implying production of the motor fuel will increase. Crack spreads widened.
Futures narrowed gains to 0.2 percent from 0.7 percent after the Energy Information Administration said refinery crude inputs climbed 1.9 percent to 15.5 million barrels a day, the most since Dec. 14. Supplies rose 183,000 barrels to 221.7 million, a nine-week high. Total inventories of crude and products are the highest since October 2010.
“At some point the market has to come to grips with the supply situation,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
July-delivery gasoline rose 0.7 cent to $2.8864 a gallon at 12:34 p.m. on the New York Mercantile Exchange. Trading volume was 26 percent below the 100-day average for the time of day.
July gasoline’s crack spread versus West Texas Intermediate widened 48 cents to $22.98 a barrel. Gasoline’s premium over August Brent increased 25 cents to $14.80.
Inventories in PADD 1, which includes New York Harbor, delivery point for the Nymex contract, slid 1.51 million barrels to 62.3 million. That’s still the highest level for this time of year since 2002. Imports fell 27 percent to 485,000 barrels a day, the least since the week ended March 15.
“Despite the draw, gasoline stocks in the all-important East Coast remain 8 million barrels higher than last year’s levels and some 5.8 million barrels higher relative to the five-year average,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Supplies in PADD 2, which includes Chicago, rose a fourth straight week to a seven-week high. Inventories of the motor fuel in PADD 3, or the Gulf Coast region, home to 45 percent of U.S. operable refining capacity, fell 10,000 barrels to 75.5 million.
Demand, measured as wholesale deliveries, rose 2.2 percent to 8.84 million barrels a day. Demand over the past four weeks was 0.4 percent lower than a year earlier.
The Federal Reserve’s Federal Open Market Committee plans to release a policy statement and economic forecast at 2 p.m. Fed Chairman Ben S. Bernanke is scheduled to hold a press conference at 2:30 p.m. Investors are looking for indications the central bank will scale back, or taper, its purchases of Treasuries as the U.S. economy extends its recovery.
“The market is waiting to hear what Bernanke has to say and whether there is any change in tone or indications whether they will reduce bond purchases,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline at the pump, averaged nationwide, fell 0.4 cent to $3.603 a gallon, Heathrow, Florida-based AAA said today on its website. Prices have fallen for seven straight days to the lowest level since May 15 and are 10.6 cents above a year earlier.
Distillate stockpiles, including diesel and heating oil, fell 489,000 barrels to 121.6 million. A survey by Bloomberg projected a build of 925,000 barrels. Demand fell 1.5 percent to 4.02 million barrels a day. Measured over four weeks, demand was 8.5 percent above a year earlier.
“Distillate demand was good,” Sen said. “it will continue to outperform gasoline with planting picking up.”
Ultra-low-sulfur diesel for July delivery rose 0.53 cent to $2.967 a gallon on trading volume that was 28 percent below the 100-day average.
The July ULSD contract’s crack spread versus WTI increased 41 cents to $26.36 a barrel. The premium over Brent gained 16 cents to $18.60.
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