Gasoline advanced in New York as Brent crude in London rebounded from an early decline on heightened concern that political instability in the Middle East may disrupt fuel production and shipments in the region.
Gasoline rose and Brent rebounded from its lows as Bahrain’s security forces attacked protesters for a second day and Egypt approved a request from Iran to allow two Iranian naval ships to pass through the Suez Canal on their way to Syria. Refineries supplying fuel to New York Harbor, the delivery point for heating oil and gasoline futures, use crude-oil grades priced relative to Brent.
“Brent rallied on these geopolitical headlines, and products basically followed what Brent did,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.
Gasoline for March delivery added 2.36 cents, or 0.9 percent, to settle at $2.5513 a gallon on the New York Mercantile Exchange. Prices gained 3.5 percent this week.
April-delivery Brent on London’s ICE Futures exchange lost 7 cents to settle at $102.52 a barrel, after earlier losing $1.86. Prices rose after the settlement, gaining 44 cents to $103.03 as of 3:54 p.m. in New York.
"There’s more violent protests in the Middle East," said Gordon Elliott, a risk management specialist at FC Stone LLC in St. Louis Park, Minnesota. "You’ve got a three-day weekend coming up and who wants to sell it with all this violence going on.’’
U.S. financial markets will be closed Feb. 21 for the Presidents Day holiday.
WTI-Brent Spread Slips
The WTI-Brent spread, based on April futures traded on Nymex and ICE Futures Europe, dropped 94 cents to $12.81 a barrel. Product futures had followed Brent to 28-month highs as the spread reached a record $15.94 two days ago on record-high inventories of oil at Cushing, Oklahoma, the Nymex contract’s delivery point.
The March contract for West Texas Intermediate crude lost 16 cents to settle at $86.20.
“While Brent is more sensitive to developments in the Middle East, it hasn’t moved much today with more profit-taking by those who shorted the WTI/Brent spreads over the last couple of weeks,” said Harry Tchilinguirian, London-based head of commodity markets strategy at BNP Paribas SA.
Gasoline outperformed heating oil, narrowing their differential by 4.31 cents to 16.16 cents, the smallest since Jan. 14, on speculation that refinery shutdowns of gasoline-making units will reduce supplies. ConocoPhillips began shutting a fluid catalytic cracker for maintenance at its Sweeny, Texas, plant yesterday, according to a state filing.
“Normally at this time of the year, you see people starting to change their positions, buying gasoline and selling heating oil,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut.
Heating oil for March delivery dropped 1.95 cents, or 0.7 percent, to settle at $2.7129 a gallon. Prices rose 0.6 percent this week.
Heating oil declined as the National Weather Service’s Climate Prediction Center projected normal temperatures for the Northeast Feb. 23 through Feb. 27. The region is the largest user of heating oil.
“Mild weather has been moving into the Northeast and that’s definitely impacted heating oil demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Regular gasoline at the pump, averaged nationwide, increased 1.1 cents to $3.156 a gallon yesterday, AAA said on its website.