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Gasoline Rises to One-Month High as Shutdowns Cut Supply

Sept. 27 (Bloomberg) -- Gasoline rose to the highest level in a month on concern that refinery shutdowns in the Atlantic Basin will further reduce stockpiles on the U.S. East Coast.

Prices climbed as Europe’s largest refinery, Royal Dutch Shell Plc’s 400,000-barrel-a-day Pernis plant in the Netherlands, is conducting maintenance until early November. Supplies on the East Coast, including New York Harbor, the delivery point for futures contracts, were the lowest since October 2008 last week, Energy Department data show.

“You’re losing a significant amount of Atlantic Basin supply,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.

Gasoline for October delivery rose 6.32 cents, or 2.1 percent, to $3.1443 a gallon on the New York Mercantile Exchange, the highest settlement since Aug. 27. Prices are up 15 percent since June.

The premium of the front month over later months, known as backwardation, widened to the largest since Sept. 1, 2005. The October contract, which expires tomorrow, was 24.71 cents over November.

U.S. gasoline inventories fell 481,000 barrels to 195.8 million barrels last week, the ninth consecutive decline and the lowest level since October 2008, according to department data. Output slid 2.1 percent to the lowest level in 10 weeks.

Tight Supply

“You have tight supply in the Harbor, coupled with refinery outages and slowdowns, and you’re heading into maintenance season,” said Dan Stauffer, an over-the-counter energy broker at INTL FCStone Inc. in New York.

Irving Oil Corp. is performing maintenance on sections of the 298,800-barrel-a-day Saint John refinery in New Brunswick, which exports more than half of its production to the East Coast.

Valero Energy Corp. shut all the main production units, including the fluid catalytic cracker and coker, at its Pembroke refinery in Wales while the plant’s only crude unit undergoes an eight-week turnaround.

The refinery maintenance at St. John, Pernis and Pembroke may further reduce shipments to the East Coast. Last week, gasoline imports were the lowest for this time of the year since at least 2004.

Gasoline stockpiles in independent storage in Amsterdam-Rotterdam-Antwerp, Europe’s oil-trading hub, dropped to the lowest level in almost a year, according to PJK International BV.

“There’s a lot of heavy maintenance going on in Europe,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Basically, we’re at extremely low levels.”

Regular gasoline at the pump fell 1 cent to $3.795 a gallon yesterday, AAA data show. Prices have fallen 12 of the past 13 days, declining 7.6 cents to the lowest since Aug. 27. Prices reached a 2012 high of $3.936 on April 4.

October-delivery heating oil rose 5.05 cents, or 1.6 percent, to $3.1573 a gallon on the exchange. Prices have gained 17 percent this quarter.

To contact the reporter on this story: Barbara J 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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