Gasoline Futures Slip in New York on Speculation U.S. Supplies Will Rise

Gasoline fell a third straight day on speculation that supplies are rising as refineries finish repairs and that demand will slip after the Christmas holidays.

Stockpiles gained a sixth consecutive time last week, adding 1.5 million barrels, according to the median estimate of 14 analysts in a survey by Bloomberg News. Hovensa LLC has restarted a 150,000-barrel-a-day fluid catalytic cracker at its St. Croix refinery, which serves the U.S. East Coast.

“The refinery restarts are a big deal,” said Phil Flynn, vice president of research at PFGBest in Chicago. “And this incredible run has been a combination of factors unlikely to be repeated after the first of the year -- pipeline issues, surging oil prices, holiday demand.”

Gasoline for January delivery dropped 1.52 cents, or 0.6 percent, to settle at $2.3904 a gallon on the New York Mercantile Exchange. Prices have fallen 2.3 percent since touching a 26-month high of $2.4458 on Dec. 23. Futures are up 16 percent this year.

The Energy Department is scheduled to report last week’s inventories tomorrow, a day later than usual because of last week’s Christmas holiday.

Gasoline supplies in the week ended Dec. 17 were at a nine- week high, according to the department.

‘Plentiful Supplies’

“We have plentiful supplies of gasoline,” said Gordon Elliott, a risk management specialist at FC Stone LLC in St. Louis Park, Minnesota.

Gasoline also slipped on expectation that demand may be down after New York City was hit with the heaviest December snowfall in six decades and below-freezing temperatures extended as far south as Florida.

Demand, measured by what refiners and blenders provide to wholesalers, fell 1.5 percent in the week ended Dec. 17, according to the department.

“The perception is that demand numbers are going to be very weak because of the weather,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.

The premium of gasoline over crude oil, or crack spread, based on February contracts, narrowed 2 cents to $9.20 a barrel.

“I expect continued pressure on the crack spread,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Refineries are operating at high utilization rates going into a period of declining gasoline demand in January and February so inventories are going to increase.”

Trading Volume

Gasoline volume in electronic trading on the Nymex was 46,414 contracts as of 3:24 p.m. in New York. Volume totaled 61,454 contracts yesterday, 48 percent below the average over the last three months.

Regular gasoline at the pump, averaged nationwide, rose 1.2 cents to $3.061 a gallon yesterday, AAA said on its website.

Heating oil for January delivery fell 0.28 cent to settle at $2.5215 a gallon. Prices have gained 19 percent this year.

Supplies of distillates, including heating oil and diesel, probably fell 625,000 barrels, according to the survey.

The crack spread, based on February contracts, widened 30 cents to $15.30 a barrel.

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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