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Gasoline Advances as Imports, U.S. Northeast Supplies Fall

Dec. 2 (Bloomberg) -- Gasoline futures rose to a six-month high as supplies in the U.S. Northeast declined and on speculation that imports may drop if cargoes from Europe head to other regions.

Inventories of the motor fuel along the East Coast fell 1.8 percent last week as imports sank 11 percent, the Energy Department reported yesterday. Irving Oil Corp. said yesterday that it shut a catalytic cracker at its Saint John refinery in New Brunswick, which supplies the New York Harbor spot market, the delivery point for the Nymex contract.

“It’s up on the tightness in the Harbor and European barrels are being diverted to other areas,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “There’s demand in the Arabian Gulf, and they will buy gasoline from European sources.”

Gasoline for January delivery gained 5.49 cents, or 2.4 percent, to settle at $2.3553 a gallon on the New York Mercantile Exchange.

Gasoline outperformed crude oil, which gained 1.4 percent, and heating oil, which rose 2 percent. Gasoline was the third best performer, behind cotton and cocoa, in the Thomson Reuters/Jefferies CRB Index of 19 commodities. Fifteen of the commodities gained and four dropped.

Irving Refinery

Irving Oil exports about 175,000 barrels a day of gasoline and other fuels to the Northeast, including New York Harbor. The company said yesterday that Saint John’s catalytic cracker would be repaired within 72 hours.

“The East Coast has been very dependent on Canadian imports, and so much capacity on the East Coast has gone down,” said Antoine Halff, head of energy research at Newedge USA LLC in New York. “And the whole Atlantic gasoline market has tightened.”

Canada was the second-largest exporter, after the Virgin Islands, of gasoline blendstocks to the U.S. in September, accounting for 16 percent of the total, according to the Energy Department. The Virgin Islands was the largest exporter that month, the most recent period for which the department has published data.

U.S. refineries operated at 82.6 percent of capacity last week, down 2.9 percentage points from a week earlier. Gasoline production slipped 1.7 percent.

“Demand is nothing special but we have been seeing inventories decline and refinery utilization down in the most recent period when typically, we see utilization increase into the end of the year,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut.

Gasoline Demand

Gasoline demand rose 0.4 percent to an average 8.87 million barrels a day. Consumption, averaged over four weeks, was down 0.5 percent from a year earlier.

The premium of January futures over the February contract increased 0.6 cent to 2.78 cents a gallon. The crack spread, based on January contracts, widened $1.05 to $10.92 a barrel.

Heating oil for January delivery advanced 4.9 cents to settle at $2.4546 a gallon. The heating oil crack spread, based on January contracts, gained 80 cents to $15.09 a barrel.

Stockpiles of distillates fell 194,000 barrels last week to 158.1 million, the 10th consecutive drop and the lowest level since June 18.

Regular gasoline at the pump, averaged nationwide, rose 1.5 cents to $2.879 a gallon yesterday, AAA said on its website.

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

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

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