Gasoline Rises to 15-Week High on Inventories, Brent

Gasoline advanced to a 15-week high on declining inventories, higher demand and a rally in Brent crude oil.

Futures gained 2.8 percent as the Energy Department reported gasoline supplies dropped 2.37 million barrels to 203.7 million, the lowest level since the week ended June 15 and the lowest for this time of the year since 2008. Wholesale demand jumped to a 13-month high. Rising Brent prices increased the price of imported crude and gasoline.

“I don’t see demand being sustainable, but you’ve got a host of refinery problems and the market is worried about incremental supply,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “I don’t think there is a lot of supply coming from Europe because they’re going into turnaround. It’s looking tight.”

September-delivery gasoline rose 8.26 cents to $3.084 a gallon on the New York Mercantile Exchange, the highest settlement since May 1.

Brent for September settlement gained $2.22, or 1.9 percent, to $116.25 a barrel on the ICE Futures Europe exchange.

“Combine that storage report with the strength in Brent today and you get a 5-cent move,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Gasoline inventories are down 3 percent in the three weeks ended Aug. 10. In the PADD 1 region, which includes New York Harbor, the delivery point of Nymex futures, stockpiles sank 1.78 million barrels to 49.9 million, the lowest level for early August since the Energy Department began reporting weekly data in 1990.

Third Week

“This is the third week in a row that gasoline has drawn a decent size,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.

Gasoline demand rose 5.3 percent to 9.31 million barrels a day, the fourth consecutive gain. Consumption over the past four weeks was 2.8 percent below a year earlier, narrower than the 4.2 percent difference the previous week.

The slide in inventories has followed a series of refinery shutdowns. BP Plc yesterday suspended work on a hydrotreater at its 420,000-barrel-a-day refinery in Whiting, Indiana, the largest Midwest plant, after a flash fire injured three workers. An Aug. 6 fire shut the only crude unit at Chevron Corp.’s 240,000-barrel-a-day refinery in Richmond, California.

“Gasoline continues its bullish run on a spate of refining problems that have reduced inventories around the country,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Distillate Supplies

Supplies of distillates, including heating oil and diesel, rose 677,000 barrels to 124.2 million, the first increase in three weeks.

U.S. factory output in July rose 0.6 percent, Federal Reserve data showed today, indicating that demand for diesel may improve. Heating oil is traded as a substitute for diesel.

Heating oil for September delivery gained 5.06 cents, or 1.7 percent, to $3.0852 a gallon on the exchange.

Regular gasoline at the pump, averaged nationwide, rose 0.7 cent to $3.709 a gallon yesterday, AAA data showed. That’s the highest level since May 17. Prices have climbed 38.3 cents since July 1, according to data from the nation’s largest motoring organization.

To contact the reporters 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