Gasoline Falls as Plants Increase Rates, Boosting Supply

Gasoline fell a third straight day on speculation refinery production will increase, boosting supplies of the motor fuel.

Futures slid as refiners along the East Coast processed the most oil since December in the week ended Oct. 5, Energy Department data show. Spot gasoline weakened in the East Coast and Gulf Coast markets last week. Speculators cut bullish bets on gasoline 0.3 percent in the week ended Oct. 9, according to the Commodity Futures Trading Commission’s Commitments of Traders report.

“We’ve seen big drops in the cash markets as the refineries come back on,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Refiners are free to make the winter blends now. Supplies should climb and that has broken the back of the market.”

Gasoline for November delivery fell 4.25 cents, or 1.5 percent, to $2.8503 a gallon on the New York Mercantile Exchange, the lowest settlement since Oct. 3. Prices gained 2 percent last week.

Plants along the East Coast processed 1.09 million barrels a day of crude in the seven days ended Oct. 5, up 24 percent from the prior week.

Delta Air Lines Inc.’s Monroe Energy LLC subsidiary has increased rates at its 185,000-barrel-a-day Trainer refinery in Pennsylvania, which would increase supplies in New York Harbor region. The refinery was closed over a year ago by former owner ConocoPhillips.

Spot Markets

In New York Harbor, reformulated gasoline to be blended with ethanol, or RBOB, sank 12 cents to 17 cents a gallon over futures last week. The premium narrowed another 6 cents today to 11 cents a gallon.

On the Gulf Coast, Motiva Enterprises LLC may restart a damaged 325,000-barrel-a-day crude unit at its Port Arthur, Texas, refinery in December, according to people familiar with operations. RBOB slipped 8.75 cents to a 1.5-cent discount last week and lost another 0.5 cent today.

“The decline is indicative of supply returning to the market,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Regular gasoline at the pump, averaged nationwide, slipped a fourth consecutive day, declining 0.7 cent to $3.787 a gallon yesterday, according to AAA, the nation’s largest motoring organization.

Supplies in the Central Atlantic section of the East Coast, which includes New York Harbor, the delivery point for Nymex futures, increased 1 million barrels last week, the first gain since August.

November-delivery heating oil fell 1.48 cents, or 0.5 percent, to settle at $3.2091 a gallon on the exchange, after gaining 2.2 percent last week.

Money managers raised bullish bets on heating oil, a proxy for diesel, by 1,291 futures and options combined, or 4.9 percent, to 27,386, the highest level since the week ended May 8, the CFTC report showed.

To contact the reporter 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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