Gasoline Falls as Refinery Output Increases, Dollar Strengthens
Gasoline dropped after Irving Oil Corp. and Valero Energy Corp. refineries returned units to service, boosting production of the fuel.
Futures slipped as Irving and Valero both started key gasoline-making units. Prices also sank as the dollar gained for the first time in four days versus the euro, increasing 0.7 percent at 2:59 p.m. in New York. A stronger U.S. currency reduces the investment appeal of dollar-denominated commodities.
“The Memphis refinery helped to push it to the downside,” said Phil Flynn, a Chicago-based analyst and trader with investment adviser PFGBest, referring to Valero’s 195,000- barrel-a-day Tennessee plant. There’s a little bit of a fundamental element and the stronger dollar, he said.
Gasoline for January delivery dropped 1.04 cents, or 0.4 percent, to settle at $2.3417 a gallon on the New York Mercantile Exchange. The premium of gasoline over crude oil, or the crack spread, based on January contracts, fell 51 cents to $9.09 a gallon.
Irving finished maintenance on a residual fluid catalytic cracker at its Saint John refinery in New Brunswick, Lesley Dickson, a company spokeswoman, said in an e-mail.
The Saint John refinery exports about 175,000 barrels of petroleum products a day to markets in the northeastern U.S., including New York Harbor, the delivery point of Nymex gasoline and heating oil contracts.
Valero started a fluid catalytic cracker at its Memphis plant over the weekend, Bill Day, a company spokesman, said in an e-mail.
Futures rose as much as 0.8 percent earlier after Federal Reserve Chairman Ben S. Bernanke said the Fed may expand bond purchases to ensure a self-sustaining economy, increasing speculation that demand for the fuel will be supported.
The U.S. Congress is considering other measures that could also strengthen fuel demand.
“It really appears that we’re going to extend the Bush tax cuts and that is very friendly for commodities” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Looks like we’re also going to extend unemployment benefits, and “gasoline would get the biggest boost with those developments,” he said.
Heating oil for January slipped 1.17 cents, or 0.5 percent, to $2.4757 a gallon. The heating oil crack spread, based on January contracts, fell 65 cents to $14.62 a gallon.
To contact the editor responsible for this story: Dan Stets at firstname.lastname@example.org.