Gasoline rose as refiners worked to increase production after disruptions caused by Hurricane Isaac reduced U.S. stockpiles to the lowest level since 2008.
Prices gained after Gulf Coast refineries operated last week at the lowest level since January. Almost one-quarter of U.K. refining capacity is expected to shut in October for planned work, reducing shipments to the East Coast. Tropical Storm Leslie is moving north up the coast and may reach Newfoundland by the middle of next week, the National Hurricane Center said in an advisory at 2 p.m. East Coast time.
“Gasoline couldn’t look more bullish,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “You have sluggish refinery restarts in the Gulf Coast, stocks are already low, you’re getting into turnaround in the U.K. and Leslie is clearly an issue.”
October-delivery reformulated gasoline, or RBOB, advanced 2.86 cents, or 1 percent, to settle at $3.0196 a gallon on the New York Mercantile exchange. Prices fell 2.8 percent this week and are up 11 percent this quarter.
Spot RBOB in New York jumped 14.12 cents to 37 cents over the October contract as of 2:55 p.m. in New York, the highest level since September 2008.
Isaac was a Category 1 hurricane that made landfall in Louisiana Aug. 29, causing flooding and power losses and the closing of seven refineries, representing 13 percent of Gulf Coast refining capacity, and the reduction of rates at four other plants.
As of today, three Louisiana refineries shut because of the hurricane were restarting and another six were operating at reduced rates, according to data compiled by Bloomberg. Gulf Coast refinery utilization dropped to 82.2 percent last week from 91.4 percent a week earlier, according to department data.
Stockpiles in the U.S. sank 1.2 percent last week to 198.9 million barrels, the lowest level since the week ended Nov. 14. In the PADD 1 region, which includes New York Harbor, the delivery point of Nymex futures, stockpiles are 6.6 percent below a year earlier.
“We’re very tight in the harbor and it doesn’t look like there’s any serious relief,” Lebow said.
Futures also gained as the U.S. added fewer than expected jobs in August, increasing speculation that the Federal Reserve will provide additional fiscal stimulus to boost the economy.
The Labor Department reported an increase of 96,000 jobs last month, following a revised 141,000 rise in July that was smaller than initially estimated. Pacific Investment Management Co.’s Bill Gross said the report will move the Fed closer to more quantitative easing.
“It seems the report started to fan the flames we’ll have some announcement about a stimulus next week,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
The median estimate of 92 economists surveyed by Bloomberg called for jobs to increase by 130,000. The unemployment rate fell to 8.1 percent from 8.3 percent as 368,000 Americans left the labor force.
“The report showed the economy added fewer jobs than expected and that more people are leaving the workforce, which increases speculation that the Federal Reserve will move to stimulate the economy,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Fed Chairman Ben S. Bernanke said in an Aug. 31 speech in Jackson, Hole, Wyoming, that the central bank may need to do more. The Fed meets Sept. 12-13.
Policy makers will give “strong hints” or provide “positive action” at next week’s rate-setting meeting, Gross, who runs the world’s biggest bond fund, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
Regular gasoline at the pump, averaged nationwide, fell 0.1 cent to $3.822 a gallon yesterday, AAA data showed. Prices are up 49.6 cents from the year-to-date low of $3.326 on July 1.
Heating oil for October delivery rose 0.64 cent to $3.1489 a gallon on the exchange. Prices fell 0.7 percent this week and are up 17 percent this quarter.