Gasoline Rallies on Inventory Decline, Iran Uranium Production

Gasoline futures rose to the highest level since July as stockpiles fell unexpectedly last week and as crude oil rallied following a report that Iran tripled its uranium production rate.

Futures advanced after Iran dismissed United Nations atomic inspectors’ concerns over possible nuclear-weapon work and the Persian Gulf nation tripled its quarterly rate of producing 20 percent-enriched uranium. Inventories (DOESTMGS) of gasoline declined 649,000 barrels to 231.5 million in the seven days ended Feb. 17, Energy Department data show.

“The biggest price drivers continue to be the geopolitical events that are occurring throughout the Middle East,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

March-delivery gasoline rose 3.92 cents, or 1.3 percent, to $3.1528 a gallon on the New York Mercantile Exchange, the highest settlement since July 26. Gasoline has gained 4.5 percent this week and 17 percent in 2012.

Prices also increased as wholesale demand jumped 5.6 percent last week to 8.63 million barrels a day, Energy Department data show. That’s the highest level since the week ended Dec. 23.

MasterCard Inc. (MA) said on Feb. 22 U.S. gasoline consumption rose 3.4 percent last week to 8.28 million barrels a day. The weekly SpendingPulse report showed demand increased from the lowest level since it began collecting the data in 2004. Demand was 6.4 percent below a year earlier.

Iran

Iran “dismissed the agency’s concerns,” the International Atomic Energy Agency said today in an 11-page restricted document obtained by Bloomberg News. “Iran considered them to be based on unfounded allegations.”

The report, distributed to IAEA member states, was published three days after inspectors’ talks with Iran broke down. Inspectors said Iran raised the number of machines used to install uranium at its Natanz complex by 14 percent and began enriching material at its Fordo mountainside complex.

Turkiye Halk Bankasi AS (HALKB), the Turkish bank that handles payments for Iranian oil, may stop processing transactions for supplies into Turkish plants from July amid tightening Western sanctions against the the second-largest oil producer in OPEC.

“The Iranian part of the equation has a potential to be a game-changer and that’s what I think is really powering this market,” Peter Beutel, the president of Cameronhanover.com in New Canaan, Connecticut, said by phone. “Now it looks like until something happens people will keep buying.”

Nuclear Program

U.S. intelligence officials fear that Iran may be developing the different components of a nuclear weapon in scattered facilities, including Parchin and other military bases where it hasn’t permitted IAEA inspections, said a U.S. official who spoke only on the basis of anonymity because intelligence matters are classified.

Refiners are working to ensure supplies of crude to replace Iranian oil. Cia. Espanola de Petroleos SA, Spain’s second- largest refiner, last week secured a guarantee for more crude from the United Arab Emirates if Iranian exports are cut.

The U.S. has offered to help India, which also uses Halk for payments to Iran, get alternative supplies for the crude, according to three people with knowledge of the matter. The U.S. may help broker deals with suppliers such as Iraq and Saudi Arabia, the people said, declining to be identified because the information is confidential.

Indian refiners have been told that Halk’s services may soon be terminated, four people with knowledge of the matter said Jan. 10.

Pump Prices

Regular gasoline at the pump, averaged nationwide, rose 3.5 cents to $3.647 a gallon yesterday, according to AAA data. Prices were 13 percent higher than a year earlier.

The government said yesterday heating oil and diesel inventories fell 208,000 barrels to 143.5 million in the week ended Feb. 17. Analysts forecast a 1.5 million-barrel decrease, according to the survey.

Heating oil for March delivery rose 2.1 cents, or 0.6 percent, to settle at $3.3159 a gallon on the exchange, the highest price since April 8. Prices have increased 4 percent this week and 13 percent in 2012.

To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

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