Gasoline surged to a six-week high as Brent crude gained after the U.S. prepared to impose additional sanctions on Iran for its nuclear program.
Futures rose 1.4 percent, reversing an earlier loss, after the Treasury Department said it would take additional steps to prevent “front companies” from evading sanctions on the Persian Gulf nation. Brent crude in London climbed 1.1 percent, raising the cost of U.S. fuel imports from Europe, on concern the actions will increase tensions in the Middle East.
August-delivery gasoline gained 3.73 cents to $2.8062 a gallon on the New York Mercantile Exchange, the highest settlement since May 31. The contract is for reformulated gasoline, or RBOB.
The premium for Brent crude over U.S. benchmark West Texas Intermediate oil for August delivery widened 57 cents to $14.99 a barrel, the biggest gap in a month.
Full sanctions on Iran by the European Union began on July 1. Iraq’s crude production overtook Iran’s last month for the first time in more than two decades as Iran led a decline in OPEC output ahead of the ban.
August gasoline’s premium over September futures widened 1.06 cents to 13.73 cents a gallon as supplies tightened in New York Harbor, the delivery point for the Nymex contract. East Coast RBOB stockpiles fell 5.3 percent last week to 14.6 million barrels, the lowest level since May 2011 and 8.8 percent below a year ago, according to Energy Department data.
“Summer RBOB inventories in the Harbor are at the lowest level in more than a year,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Heating oil for August delivery rose 1.15 cents, or 0.4 percent, to settle at $2.7733 a gallon, the highest settlement since May 29.
Regular gasoline at the pump, averaged nationwide, rose 0.1 cent yesterday to $3.384 a gallon, according to AAA. Gasoline reached a year-to-date high of $3.936 on April 4.
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