Gasoline Slides as Supplies Gain Near End of Peak Demand

Gasoline slid on concern the highest seasonal inventories in more than two decades will exceed demand for the motor fuel as summer driving season nears an end.

Futures retreated as much as 0.9 percent after supplies rose to 223.6 million in the seven days ended Aug. 2, the highest level for this time of year in weekly data going back to 1990, according to Energy Information Administration data. Crack spreads declined.

“Gasoline inventories are much higher than previous years and as we move into the end of summer driving season, we’re going to see gas prices come under pressure,” said Andy Lipow, president of Lipow Oil Associates LLC, who is based in Houston.

Gasoline for September delivery fell 1.97 cents, or 0.7 percent, to $2.8885 a gallon at 9:59 a.m. on the New York Mercantile Exchange. Volume was 25 percent lower than the 100-day average.

Supplies of motor fuel in PADD 1B, which includes New York Harbor, the delivery point for gasoline futures, were 30.4 million barrels, the highest level since July 5, according to Energy Information Administration data.

Nationwide demand for the fuel was 9.25 million barrels a day last week, according to EIA data.

The fuel’s crack spread versus West Texas Intermediate oil slipped 15 cents to $16.02 a barrel, while the fuel’s premium over Brent crude on ICE Futures Europe declined 40 cents to $13.52.

Growing Inventories

With “demand stagnant and inventories growing, crack spreads should continue to narrow in the near term,” Tom Finlon, director of Energy Analytics Group Ltd., said by phone from Jupiter, Florida.

Ultra-low-sulfur diesel for September fell 0.43 cent to $2.9892 a gallon on volume that was 36 percent below the 100-day average. ULSD’s crack spread versus WTI crude widened 50 cents to $20.26 a barrel, and the premium over Brent increased 26 cents to $17.77.

Pump prices, averaged nationwide, slipped 0.6 cent to $3.549 a gallon, the 11th consecutive decline and lowest level since July 10, Heathrow, Florida-based AAA said today on its website. Prices are 13.6 cents below a year ago.

To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net

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

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