Gasoline Gains as Shut Pipeline Seen Crimping East Coast Supply

Gasoline futures rose on speculation that the closing of a key pipeline transporting Gulf Coast oil products to the U.S. Northeast will reduce East Coast inventories.

Prices gained as much as 0.6 percent one day after Colonial Pipeline Co., shut the segment for unplanned repairs. The line is capable of moving 850,000 barrels a day of gasoline and distillates from North Carolina to New Jersey. Gasoline stockpiles in PADD 1B, which includes New York Harbor, the delivery point for futures, were seasonally the lowest since 2004 in the week ended March 14, according to Energy Information Administration data.

“The products are going to be supported by the Colonial Pipeline outage and the inability to deliver gasoline and diesel into the New York area,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

April-delivery gasoline rose 1.14 cents, or 0.4 percent, to $2.8942 a gallon at 10 a.m. on the New York Mercantile Exchange. Volume was 28 percent below the 100-day average.

Colonial said today that repairs are being made to the pipeline and if they “continue as projected” the line should return to full service tomorrow.

Total U.S. gasoline inventories were at an 11-week low in the week ended March 14. The EIA is scheduled to report last week’s inventories at 10:30 a.m. today in Washington. The report will probably show that gasoline stockpiles declined 1.5 million barrels, according to the median estimate of 11 analysts in a survey by Bloomberg. Distillates, including diesel and heating oil, fell 1.38 million barrels.

API Report

The American Petroleum Institute reported yesterday that gasoline inventories fell 2.84 million barrels while supplies of distillates, including diesel and heating oil, rose 267,000.

“The market expects a decline in gasoline inventories,” Lipow said.

The motor fuel’s crack spread versus May-delivery WTI narrowed 25 cents to $21.59 a barrel. Gasoline’s premium to Brent fell 5 cents to $14.38.

The average U.S. pump price rose 0.4 cent to $3.535 a gallon, the highest since Sept. 12, according to data from Heathrow, Florida-based AAA. Drivers are paying 12.5 cents less than a year ago.

Ultra low sulfur diesel for April delivery gained 0.56 cent to $2.9271 a gallon on volume that was 52 percent below the 100-day average.

Diesel’s crack spread versus WTI narrowed 57 cents to $22.91 a barrel. The premium over European benchmark Brent fell 8 cents to $15.77.

To contact the reporter on this story: Barbara Powell in Houston at bpowell4@bloomberg.net

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

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