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Oil Falls First Time in Four Days on Gasoline

Oil fell for the first time in four days as gasoline dropped on expectations that a supply shortage in New York Harbor will ease.

Crude futures decreased 0.6 percent as gasoline fell for the first time in six days, paring last week’s 14 percent gain. Oil supplies probably climbed for the third time in four weeks, a Bloomberg survey showed before a government report tomorrow. Oil and gasoline accelerated their decline in the last 15 minutes of floor trading as volume jumped.

“Gasoline had a huge run last week, but it’s starting to come off and it’s putting pressure on crude,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “We are going to have some inventory build tomorrow” in crude.

Crude for November delivery slipped 59 cents to settle at $91.89 a barrel on the New York Mercantile Exchange. Prices are down 7 percent this year.

Prices were little changed after the industry-funded American Petroleum Institute reported inventories rose 462,000 barrels last week to 362.9 million. Oil dropped 77 cents to $91.71 a barrel in electronic trading at 4:32 p.m. It was $91.67 before the report was released at 4:30 p.m.

Brent for November settlement fell 62 cents, or 0.6 percent, to $111.57 a barrel on the London-based ICE Futures Europe exchange.

Gasoline for November delivery decreased 5.09 cents, or 1.7 percent, to $2.8692 a gallon on the Nymex as some refineries restarted units.

Gasoline Falls

“If gasoline were not down a nickel, I would not expect oil to be down,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “If you don’t have a bull market in the products, there’s no reason to own crude oil.”

Electronic trading volume for oil on the Nymex jumped 28 percent to about 275,000 contracts as of the 2:30 p.m. close of floor trading from around 215,000 at 2:15 p.m.

Supplies may become more plentiful for the East Coast market as refineries restart and units are returned to operations after repairs.

Delta Air Lines Inc. is nearing planned rates in its restart of the Trainer, Pennsylvania, refinery it bought from ConocoPhillips (COP), and Irving Oil Corp. said it expects to complete maintenance at the end of the month on its Saint John refinery in New Brunswick, which exports more than half its output to the U.S. Northeast market.

Refinery Shutdowns

Refinery shutdowns in North America and Europe sent gasoline supplies on the East Coast, including New York Harbor, the delivery point for futures contracts, to the lowest level since October 2008 in the week ended Sept. 21, Energy Department data showed Sept. 26.

Motiva Enterprises LLC’s refinery in Convent, Louisiana, has restarted a fluid catalytic cracker that had been shut since Aug. 28 when the refinery was idled before Hurricane Isaac struck Louisiana, according to two people familiar with refinery operations yesterday.

“The market is still kind of in the wait-and-see mode,” said Jacob Correll, a Louisville, Kentucky-based analyst at Summit Energy Inc., which manages more than $20 billion in companies’ annual energy spending. Gasoline may “pull oil down a little bit.”

Regular gasoline at the pump, averaged nationwide, slid 0.2 cent to $3.78 a gallon yesterday, the lowest level since Aug. 27, according to data from Heathrow, Florida-based AAA, the largest U.S. motoring group.

Oil Supply

Oil inventories in the U.S. probably increased 1.5 million barrels, or 0.4 percent, to 366.7 million barrels last week, the Bloomberg survey of 11 analysts showed. Imports into the U.S. probably rose after the biggest weekly drop since July 1998 in the week ended Sept. 21.

“There is no concern about supplies in the U.S,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Gasoline supplies probably slid 500,000 barrels, or 0.3 percent, to 195.3 million last week for the 10th weekly drop, the survey showed. That would send stockpiles to the lowest level since October 2008.

Inventories of distillate fuel, a category that includes diesel and heating oil, probably dropped for a third week, down 400,000 barrels, or 0.3 percent, to 127.3 million barrels.

Euro Advances

Oil rose earlier as the euro gained as much as 0.6 percent to $1.2968 as speculation persisted that Spain will eventually seek a bailout. A stronger euro and weaker dollar boost oil’s appeal as an investment alternative.

The euro and equities retreated from the day’s highs and oil fell after Spanish Prime Minister Mariano Rajoy said a request for rescue funds is not imminent. The Standard & Poor’s 500 Index was little changed at 1,445.75 from 1,444.49 yesterday.

Spanish Economy Minister Luis de Guindos said yesterday after a meeting with Olli Rehn, the European Union’s economic and monetary affairs commissioner, that the country is studying the ECB bond-buying proposal.

The ECB will probably keep its benchmark rate at a record low of 0.75 percent when council members meet, according to a Bloomberg survey before the meeting at the end of the week.

“The euro is testing the $1.30 level and that should be helpful to the market,” said Bill Baruch, senior market strategist at Iitrader.com in Chicago. “We are trading ahead of European interest-rate decisions later this week.”

The EU used 13.5 million barrels of oil a day in 2011, or 16 percent of the world’s total, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. consumed 18.8 million barrels a day.

Volume was at 314,250 in electronic trading at 4:33 p.m. It totaled 392,478 contracts yesterday, 26 percent below the three- month average. Open interest was 1.55 million.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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