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Gasoline Falls as Concern Eases Libya Unrest Reduced Supplies

Gasoline fell in New York for the first time in six days as concern eased that global oil shipments will be affected by the unrest in North Africa and the Middle East that has spread to Oman.

Futures slipped as Bob Knight, head of tankers at Clarkson Plc, the world's largest shipbroker, said most ships dispatched to pick up Libyan oil cargoes were successful in the past week. Saudi Aramco, the world’s largest state oil company, is ready to compensate for any shortfall in crude supply, Chief Executive Officer Khalid Al-Falih said. Two demonstrators were killed yesterday in Oman.

Saudi Arabia is saying it will make up shortfalls and some tankers have been loading,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “There’s still concern the unrest will spread.”

Gasoline for March delivery lost 0.99 cent, or 0.4 percent, to expire at $2.7296 a gallon on the New York Mercantile Exchange. Gasoline rose 9.6 percent in February, the biggest monthly gain since March 2010. The more actively traded April contract dropped 1.59 cents to $2.8927 a gallon.

March futures advanced 7.4 percent last week on concern that reduced exports from Libya to Europe would lower European gasoline exports to the U.S. Libya’s normal daily output of 1.6 million barrels of oil has been cut by more than 1 million barrels, Barclays Capital said.

Today’s drop in futures prices is the first since Feb. 17.

No ’Burning Headline’

“There hasn’t been a burning headline for the market to do anything,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas. “We’re hanging our hat on what comes out of Saudi Arabia and just waiting for another headline out of the Middle East.”

Heating oil for March delivery fell 0.51 cent to settle at $2.9258 a gallon. The contract, which expired today, added 6.5 percent this month. The April contract, which becomes the front- month contract tomorrow, dropped 0.66 cent to $2.9389.

Futures gained 8 percent last week, the most since Oct. 16, 2009, on concern deadly government crackdowns on protesters against Libyan Muammar Qaddafi would spread to the Persian Gulf, home of the world’s biggest oil reserves.

Heating oil, traded as a substitute for diesel, was up earlier as the Institute for Supply Management-Chicago Inc. said its business barometer grew to 71.2, the highest level since July 1988, from 68.8 in January.

Fear of Disruption

“Economic indicators are pretty good and the level of uncertainty and the fear of a supply disruption are still the main driver,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “We’re in the eye of the storm right now and it’s unclear if the magnitude of the storm accelerates or it breaks up.”

The U.S. said it will assist Libyan rebels trying to force Qaddafi from power. Now, the regional unrest that ousted Tunisian President Zine El Abidine Ben Ali and Egyptian President Hosni Mubarak has reached Oman, which produces about 800,000 barrels a day and lies at the entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.

Crude products have gained this month as North Sea Brent crude in London reached as high as $119.79 a barrel. Heating oil and gasoline are vulnerable to changes in Brent because refineries supplying fuel to New York Harbor, the delivery point for heating oil and gasoline futures, use crude oil grades priced relative to the European oil.

April-delivery Brent on London’s ICE Futures exchange dropped 36 cents to settle at $111.80 a barrel. Brent gained 11 percent this month, the largest monthly increase since May 2009.

Regular gasoline at the pump, averaged nationwide, advanced 1.4 cents to $3.368 a gallon yesterday, AAA said on its website.

To contact the reporter on this story: Barbara J 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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