Gasoline Gains as Supplies Fall, U.S. Economy Shows Resilience

Gasoline advanced as inventories fell and as crude oil rallied on reports indicating the U.S. economy is stronger.

Futures rose 1 percent as the Energy Information Administration reported that gasoline supplies declined 1.74 million barrels to 233.3 million in the week ended Jan. 18, the first drop in nine weeks. The index of U.S. leading indicators climbed in December by the most in three months and jobless claims last week sank to a five-year low.

“The inventory report wasn’t particularly bearish and the economic data continues to provide optimism that the U.S. economy will improve and hence support petroleum demand,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.

Gasoline for February delivery rose 2.91 cents to settle at $2.8629 on the New York Mercantile Exchange. Volume was 12 percent above the 100-day average.

February gasoline and heating oil contracts will expire at the close of floor trading Jan. 31. The more actively traded March gasoline contract advanced 2.78 cents to $2.8767 a gallon.

West Texas Intermediate crude for March delivery rose 72 cents to settle at $95.95 a barrel on the Nymex. WTI’s discount to Brent, the London benchmark crude, narrowed 24 cents to $17.33.

The March gasoline crack spread versus West Texas Intermediate widened 45 cents to $24.87 a barrel and increased 69 cents to $7.54 against Brent.

The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after the November reading was revised to unchanged from a previously reported decline, the New York-based group said today.

Jobless Claims

Applications for unemployment insurance payments decreased by 5,000 to 330,000 in the week ended Jan. 19, the fewest since the same week in 2008, the Labor Department reported today in Washington.

Even as total U.S. gasoline supplies fell the most since Aug. 10, inventories of reformulated gasoline for ethanol blending, or RBOB, in PADD 1, the U.S. East Coast, rose 4.6 percent to 16.2 million barrels, the highest level since June 22, EIA data show.

“Gasoline inventories have gone up huge amounts, Gulf Coast gasoline stocks are at record levels and blendstock levels are high,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London. “There is plenty of supply.”

Heating oil for February delivery gained 0.83 cent, or 0.3 percent, to $3.0864 a gallon on the exchange. The March contract rose 1.12 cents to $3.0764. Volume was 1.4 percent above average.

U.S. distillate stockpiles rose 508,000 barrels in the week ended Jan. 18 to 132.9 million, the highest level since March 30, according to EIA data.

Diesel Supplies

Supplies of ultra-low sulfur diesel jumped 738,000 barrels to 103.7 million, the most since Feb. 17. Inventories have risen 30 percent in eight weeks.

“The recent builds are a combination of strong refinery outputs and a lull in import demand from Latin America,” said Andrew Reed, a principal and oil market analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. “And January is the first month in more than a year we have colder than normal temperatures to support heating oil demand.”

PADD 1 heating oil supplies rose for the first time in six weeks, increasing 0.2 percent to 15.4 million barrels, the department reported. Inventories are 39 percent below a year earlier.

The retail price for regular gasoline, averaged nationwide, rose 0.5 cent to $3.321 a gallon, AAA said today on its website. That’s the seventh consecutive increase.

To contact the reporter on this story: Barbara 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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