Gasoline Gains as Lower Refinery Output May Reduce U.S. Supplies
Gasoline climbed from a 10-week low on speculation that lower margins may spur refiners to reduce output even as plant breakdowns and seasonal maintenance may reduce supplies of the motor fuel.
Futures rose as the Energy Information Administration will probably report today that inventories fell 1 million barrels last week, according to the median estimate of 12 analysts in a survey by Bloomberg. BP Plc shut a fluid catalytic cracker yesterday for unplanned repairs at its Whiting, Indiana, refinery. Gasoline’s premium to West Texas Intermediate crude is down 70 percent since July 16 and its crack spread versus Brent crude was down 84 percent.
“Products are reacting to a number of refining problems, including issues at BP Whiting and refiners on the West Coast,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Several refiners on the Gulf Coast are considering run cuts in light of deteriorating margins.”
Gasoline for October delivery rose 1.19 cents, or 0.4 percent, to $2.7476 a gallon at 9:43 a.m. on the New York Mercantile Exchange. Trading volume was 1.1 percent below the 100-day average.
Futures fell 4.1 percent the prior two days as crude retreated on lessening concern that the U.S. would launch a military strike against Syria over its alleged use of chemical weapons against its own people. President Barack Obama said last night in an address from Washington that he will pursue a proposal by Russia for Syria to surrender its stockpiles of chemical weapons to international authorities.
“The market will await the outcome of diplomatic action over the next couple of weeks,” Lipow said.
Planned maintenance at Gulf Coast, Midwest and East Coast refineries will reduce daily capacity by 1.42 million barrels in September, 795,000 barrels in October and 170,000 barrels in November, said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Pump prices, averaged nationwide, fell 0.6 cent to $3.558 a gallon, 28.5 cents below a year ago, Heathrow, Florida-based AAA said today on its website.
The industry-funded American Petroleum Institute reported yesterday that gasoline stockpiles rose 195,000 barrels last week and supplies of distillates, including heating oil and diesel increased 807,000 barrels. The survey projected that the EIA will report that distillate inventories gained 600,000 barrels.
Ultra-low-sulfur diesel for October delivery gained 1.71 cents, or 0.6 percent, to $3.0839 a gallon, after settling yesterday at the lowest level since Aug. 14. Trading volume was 12 percent below the 100-day average.
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