Gasoline sank to a seven-week low as Brent crude weakened to its poorest performance in two years against West Texas Intermediate after three Canadian pipelines were shut. Crack spreads narrowed.
Futures slipped 0.9 percent, capping the biggest three-day slide since April 5, as Brent crude’s premium to WTI touched $5.93 a barrel, making processing oil priced off Brent less expensive. Enbridge Inc. (ENB) said it has no timeframe for restarting the three lines, shut since June 22 after a leak. Gasoline’s crack spread versus WTI narrowed $2.31 to $19.36 a barrel, the lowest level since January 2012.
“The market clearly thinks it’s going to impact structure and it may have a supply impact,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “Nothing is coming out of Enbridge so the market is nervous that there’s more there than meets the eye. The Brent-WTI spread is exploding.”
July-delivery gasoline fell 2.41 cents to $2.7376 a gallon on the New York Mercantile Exchange, the lowest settlement since May 1. Volume was 9.8 percent above the 100-day average at 3:03 p.m.
The fuel’s premium over Brent fell $1.07 to $13.38, a four-month low.
Brent weakened on speculation the shutdown of the three pipelines in Canada, the largest source of crude imports, will increase demand for WTI, particularly from Midwestern refineries who may turn for supply to Cushing, Oklahoma, the crude storage hub and delivery point for the WTI contract.
Demand for Cushing oil may also jump when Enbridge reopens a line carrying oil from the hub to Phillips 66 (PSX:US)’s 356,000-barrel-a-day Wood River refinery in Illinois. That line is scheduled to start up June 29.
“Brent has finally given it up,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Brent oil for August delivery increased 25 cents to settle at $101.16 a barrel on the London-based ICE Futures Exchange. Brent was at a $5.98 premium to WTI, the lowest based on settlement prices since January 2011.
Gasoline at the pump, averaged nationwide, slipped 0.6 cent to $3.567 a gallon, Heathrow, Florida-based AAA said today on its website. Prices have retreated 12 consecutive days and are the lowest since May 9.
Ultra-low sulfur diesel rose as the front-month contract for gasoil in Europe was valued higher than later months for a fourth straight day. Royal Dutch Shell Plc halted maintenance activities at its 404,000-barrrel-a-day Pernis refinery in the Netherlands after an odor was detected.
“Gasoil spreads are very strong and Shell just extended maintenance at its Pernis refinery,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Ultra-low-sulfur diesel for July delivery rose 1.06 cents, or 0.4 percent, to $2.8547 a gallon on trading volume that was 30 percent above the 100-day average at 3:21 p.m. Prices fell 4 percent last week.
ULSD’s crack spread versus WTI narrowed $1.08 to $24.65 a barrel. The premium over Brent was 16 cents higher at $18.67.
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