Gasoline Rises as Supplies Fall to 33-Month Low in Isaac

Gasoline advanced the most in a week as an Energy Department report showed inventories slid last week to the lowest level since November 2008.

Futures rose for the first time in three days as gasoline supplies fell 2.33 million barrels to 198.9 million as Hurricane Isaac idled 13 percent of Gulf Coast production. Gasoline demand over the past four weeks was 0.7 percent above a year ago.

“You had a fairly decent gasoline draw in the front of Labor Day,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “Demand is up in a market where gasoline prices are rising.”

October-delivery gasoline advanced 4.12 cents, or 1.4 percent, to settle at $2.991 a gallon on the New York Mercantile exchange, the largest gain since Aug. 27.

Regular gasoline at the pump, averaged nationwide, slipped 0.1 cent to $3.823 a gallon yesterday, AAA data showed. Prices are up 49.7 cents from the year-to-date low of $3.326 on July 1.

Demand for the motor fuel rose 1.3 percent in the seven days ended Aug. 31 to 9.18 million barrels a day. Consumption typically declines after the Labor Day holiday, which fell this year on Sept. 3. Emissions specifications in fuel loosen after the summer, making the fuel cheaper to produce and expanding available supply.

“Gasoline demand has stayed strong, which is surprising,” said Sander Cohan, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts.

Inventories have declined 5.3 percent in the past six weeks, department data show.

Refineries Starting

As of today, five Louisiana refineries that had been shut because of the hurricane were restarting and another four were operating at reduced rates, according to data compiled by Bloomberg. Gulf Coast refinery utilization dropped to 82.2 percent from 91.4 percent a week earlier.

“Refineries are not coming back as quickly as hoped,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

In the PADD 1 region, which includes New York Harbor, the delivery point of Nymex futures, stockpiles are 6.6 percent below a year earlier and the lowest level for this time of the year since 2007.

Heating oil for October delivery rose 2.49 cents, or 0.8 percent, to $3.1425 a gallon on the exchange.

Distillate Stockpiles

Supplies of distillates, including heating oil and diesel, climbed 993,000 barrels to 127.1 million, the fourth consecutive increase. Inventories, while the highest since April 13, are 19 percent below a year earlier and are the lowest for this time of the year since 2004.

“We suspect the scale of the reported build was attributable to a marked decline in gross exports that would have been constrained by the hurricane,” Gareth Lewis-Davies and Harry Tchilinguirian, analysts at BNP Paribas SA in London, said in an e-mailed report today.

Demand for distillates slipped 9.6 percent to 3.22 million barrels a day, the lowest level since the week ended March 16.

“Gasoline demand was up over a year earlier while the distillate demand number was really soft but it was a hurricane week and things can be screwy,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.

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.

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