Gasoline futures rose to a six-month high on indications that the U.S. jobs market is improving and that manufacturing in the U.S., Europe and China is growing, which could boost demand for motor fuel.
Futures gained the most since July 2009 after a report that showed fuel production and imports fell last week. European output expanded at the fastest pace in four months and China’s manufacturing increased a fourth straight month. U.S. employment rose the most in three years, according to ADP Employer Services.
“Refinery utilization is down and refiners are going to continue to try to manage the crack spread,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “But it’s really two things, some calming words around the euro and Europe debt and decent economic data in the U.S. and China.”
Gasoline for January delivery gained 11.36 cents, or 5.2 percent, to settle at $2.3004 a gallon on the New York Mercantile Exchange, the highest settlement for the front-month contract since May 4. Futures were trading at $2.2503 when the Energy Department’s inventory report was released at 10:30 a.m. in Washington.
Gasoline widened gains after Irving Oil Corp. said it shut a catalytic cracker at its Saint John refinery in New Brunswick for unplanned repairs. That refinery serves the New York Harbor market, which is the delivery point for the Nymex contract.
“I think that news unhinged the market a little,” said Andrew Lebow, senior vice president for energy at MF Global Inc. in New York. “That’s a key refinery, and the Northeast has gotten real tight because of lack of imports and refinery downtime.”
Supplies of the motor fuel in Padd 1, which includes New York Harbor, fell 1.8 percent last week, as imports sank 11 percent. U.S. refineries operated at 82.6 percent of capacity, down 2.9 percentage points, sending gasoline production to a seven-week low.
The premium of January futures over the February contract increased 1.65 cents to 2.18 cents a gallon.
“How much further it goes we don’t know, but there’s a lot of upside risk to that spread,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas. “We’ll probably have cargoes coming this way the first half of December and there’s talk that some of the prompt barrels coming out of Europe are being diverted to West Africa.”
The premium of gasoline over crude oil, or the crack spread, based on January contracts, widened $2.13 to $9.87 a barrel. That’s the strongest spread for the contract closest to expiration since Nov. 19.
Margins are stronger because “runs are still low and you would have expected a stronger build in inventories this time of year,” said Sander Cohan, an analyst with Energy Security Analysis Inc in Wakefield, Massachusetts.
Total U.S. gasoline stockpiles rose 561,000 barrels to 210.1 million last week, the second consecutive increase. Supplies are 1.8 percent below a year earlier and 4 percent above the five-year average for the period.
Futures rose before the inventory report as manufacturing expanded. A gauge of manufacturing in the 16-nation euro area rose to 55.3 from 54.6 the prior month, London-based Markit Economics said today. In China, the Purchasing Managers’ Index increased to 55.2 from 54.7, China’s logistics federation said today on its website.
In the U.S., the Institute for Supply Management’s factory index slipped to 56.6 in November from a five-month high of 56.9 the month before. A reading higher than 50 indicates growth.
U.S. employment increased by 93,000 in November after a revised 82,000 gain in October, according to figures from ADP Employer Services.
Construction spending in the U.S. rose 0.7 percent in October, lifted by the biggest gain in residential projects in six months, Commerce Department figures showed today in Washington.
“There’s some better-than-expected data out of Europe, China and the U.S. and, when the data gets better, we start to move back up,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Futures also rose as the dollar fell 1.2 percent against the euro after European Central Bank President Jean-Claude Trichet said investors are underestimating the determination of policy makers to shore up the shared currency. A drop in the U.S. currency increases the appeal of dollar-denominated commodities to investors in other countries.
Heating oil for January delivery advanced 8.12 cents, or 3.5 percent, to settle at $2.4056 a gallon, the highest settlement since Nov. 11. The heating oil crack spread, based on January contracts, gained 77 cents to $14.29 a barrel.
Stockpiles of distillates fell 194,000 barrels to 158.1 million, the 10th consecutive drop and the lowest level since June 18.
Regular gasoline at the pump, averaged nationwide, rose 1 cent to $2.864 a gallon yesterday, AAA said on its website.