Gasoline Rises as Middle East Tensions Boost Brent Crude

Gasoline dropped on speculation that fuel supplies will increase in the Midwest and maintenance at California refineries may be delayed.

Prices slipped as Phillips 66 (PSX) delayed work on a unit at the Rodeo refinery in California to take advantage of a gasoline- price surge after a fire at Chevron Corp.’s Richmond plant, a person with direct knowledge of the schedule said Aug. 9. Plants in the U.S. Midwest operated at 97.6 percent of capacity in the week ended Aug. 3, up from 93.9 percent a year earlier, Energy Department data shows.

“There’s hope that the Midwest is going to kick up production,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “In California, some refiners are going to delay maintenance.”

Gasoline for September delivery fell 1.32 cents, or 0.4 percent, to settle at $2.9907 a gallon on the New York Mercantile Exchange.

A tanker is scheduled to deliver a cargo of vacuum gasoil today to Richmond, enabling fuel processing in parts of the Northern California refinery that weren’t damaged in the Aug. 6 fire.

The Energy Commander is delivering the cargo of high- and low-sulfur vacuum gasoil to the plant, Manolis Karakatsanis, an official at Athens-based Enterprises Shipping & Trading SA, the vessel’s owner, said by phone today. It will arrive today, data entered by the ship’s captain and captured by IHS Inc. showed.

Chevron shut the No. 4 crude unit at the 240,000-barrel-a- day refinery after last week’s fire and and is operating the facility at reduced capacity. The crude unit processed oil into intermediate products including vacuum gasoil that is further refined into transportation fuels by other units.

Brent Crude

The motor fuel rose earlier as maintenance at North Sea oil fields boosted Brent crude, increasing the cost of oil imported by U.S. refiners and shipments of fuel from Europe.

Brent rallied 0.6 percent after the U.S. said one of its guided-missile destroyers collided with an oil tanker near the Strait of Hormuz in the Persian Gulf. The Haaretz daily reported that Israel is considering a strike against Iran over its nuclear program. September North Sea exports of main crude grades slumped to a four-year low.

“Low levels of loadings in the North Sea and more chatter about the Middle East have put a nice bid into Brent and that is what is putting a bid into products,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

North Sea

Daily exports of the 12 main grades of North Sea crude for loading in September will total 47.8 million barrels, or 1.59 million barrels a day, the lowest level since at least February 2008 when Bloomberg started compiling the datas. This compares with revised 1.88 million barrels a day this month.

Heating oil for September delivery fell 0.22 cent to $3.0183 a gallon on the Nymex.

Regular gasoline at the pump, averaged nationwide, rose 0.4 cent to $3.696 a gallon, AAA data showed. That’s the highest level since May 18. Prices have climbed 37 cents since July 1, according data from the nation’s largest motoring organization.

To contact the reporters on this story: Paul Burkhardt in New York at pburkhardt@bloomberg.net; 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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