Gasoline futures rose as U.S. equities advanced and the dollar gave up some of its gains against the euro, increasing the investment appeal of dollar-denominated commodities.
Prices erased an early loss as the Standard & Poor’s 500 Index advanced 0.1 percent after slipping as much as 0.6 percent. The dollar was up 0.2 percent against the euro as of 3:47 p.m. after earlier gaining as much as 0.5 percent.
“Everything was selling off early this morning and now the stock market is coming back and the dollar is about unchanged,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “It feels like the selling has about exhausted itself.”
Gasoline for September delivery rose 0.8 cent, or 0.4 percent, to settle at $1.9612 a gallon on the New York Mercantile Exchange. It was the second consecutive gain after five days of declines.
The Energy Department reported gasoline inventories fell 39,000 barrels last week to 223.3 million, little changed near a 14-week high as the U.S. nears the end of the summer driving season. Stockpiles have expanded 2.7 percent since June 18 and are 6.5 percent above a year earlier.
The higher-demand season traditionally ends after the Labor Day holiday, which falls on Sept. 6 this year.
“People are starting to realize we’re swimming in supplies,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Volume was 101,051 contracts in electronic trading as of 4:43 p.m. Volume on Aug. 11 was 206,329, the highest total since May 5. The average daily volume over the three months through yesterday was 103,000.
“There’s short-term, low-confidence trading going on,” said Ray Carbone, president of Paramount Options Inc. in New York and a trader at the New York Mercantile Exchange. “Until we get volume and confidence back in the market, we’re going to have these choppy, choppy moves.”
Gasoline inventories have risen seven of the past eight weeks. Supplies were projected to fall 375,000 barrels, according to the consensus estimate of 18 analysts in a survey by Bloomberg News.
Demand, measured by what refiners and blenders supplied to wholesalers, rose 2.4 percent to 9.46 million barrels a day. Measured on a four-week average, demand was 3.5 percent above a year earlier.
“Demand improves, but we really didn’t go down in supply,” said Sander Cohan, an analyst with Energy Security Analysis Inc in Wakefield, Massachusetts. “Refiners continue going all-out on gasoline production. We’re one week closer to the end of gasoline season and there still isn’t any indication these stocks are going to go anywhere.”
Imports jumped 13 percent to an average 1.08 million barrels a day. Refiners raised rates last week by 1.9 percentage points to 90 percent of capacity.
The premium of gasoline over crude oil, or the crack spread, based on September contracts, widened about 69 cents to $6.95 a barrel.
“I think the crack is improving today because people are liquidating oil,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “It’s technical trading. They were getting long up in the 80s.”
Crude oil for September delivery slipped 35 cents, or 0.5 percent, to settle at $75.42 on the exchange.
Supplies of distillates, including diesel and heating oil, rose 1.1 million barrels to 174.2 million, 7.8 percent above a year earlier and the highest level since January 1983. The survey projected an increase of 1.5 million barrels.
Distillate demand rose for the first time in three weeks, gaining 8.1 percent to 3.67 million barrels a day. Consumption, measured on a four-week basis, was 5.8 percent above a year earlier.
Heating oil for September delivery dropped 0.1 cent to settle at $2.0249 a gallon, after earlier touching $1.987. The heating oil crack spread, based on September contracts, widened about 31 cents to $9.63 a barrel.
Regular gasoline at the pump, averaged nationwide, fell 0.5 cent to $2.737 a gallon yesterday, AAA said on its website.