Gasoline surged to a five-month high as Greece approved measures to ward off default, easing concern that European demand may decline, while refinery shutdowns increased speculation that supplies may be curtailed.
The best performing energy commodity this year rose for the fourth time in five sessions as Greek political leaders reached a deal that may lead to the country’s second rescue in two years. Hovensa LLC and Petroplus Holdings AG are closing plants this month in the U.S. Virgin Islands and Germany.
“We’re up on the Greek austerity deal, and concern about refinery issues is keeping the market on edge,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Gasoline for March delivery rose 3.76 cents, or 1.3 percent, to $3.0128 a gallon on the New York Mercantile Exchange. It was the highest settlement for the front-month contract since Aug. 31. Prices have risen 12 percent this year.
“I think it can go all the way up to $3.20,” said Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida. “Gasoline has been a bullish buy since making a double bottom on Dec. 16 and Dec. 19. That’s what a real bull market looks like, higher lows and higher highs.”
A double bottom refers to the level a commodity drops to twice in succession, a technical indicator that the futures have buying support at that price and may rebound.
Greek Prime Minister Lucas Papademos called European Central Bank President Mario Draghi to tell him “an agreement has been reached,” Draghi said at a press conference today in Frankfurt.
Futures rose 1.6 percent yesterday as Petroplus said it’s halting production at its Ingolstadt refinery within two weeks. The refiner shut three other plants and is operating a fifth in the U.K. at reduced rates. Hovensa shut its St. Croix plant and two refineries in Pennsylvania closed late last year.
“This closure level is significant,” Bill Klesse, chief executive officer of Valero Energy Corp., said today during the Credit Suisse Energy Summit in Vail, Colorado. “There’s basically a million barrels a day out of this market.”
Refiners are also shutting units for seasonal maintenance. Valero is shutting a crude unit and coker today at the 250,000-barrel-a-day St. Charles refinery in Norco, Louisiana, for 10 weeks of planned work.
Citgo Petroleum Corp. will shut most of the production units at its 170,500-barrel-a-day Lemont, Illinois, refinery near the end of April for a planned turnaround, according to two people familiar with refinery operations.
Over the past four weeks, gasoline demand, measured by deliveries to wholesalers, was 6.8 percent lower than a year earlier, the Energy Department reported yesterday.
“A lot of the movement higher comes from the Dow, which shows an economy that is expanding, the euro moving higher and the closure of a number of refineries that cuts into supply and ignores demand entirely,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “We have dismal demand in the U.S. right now.”
Gasoline’s discount to the front-month heating oil contract narrowed a second straight day, to 19.57 cents from 21.43.
March-delivery heating oil rose 1.9 cents, or 0.6 percent, to settle at $3.2085 a gallon on the exchange.
Regular gasoline at the pump, averaged nationwide, rose 0.5 cent to $3.488 yesterday, according to AAA data. Prices were 12 percent higher than a year earlier.