Gasoline pared gains on speculation flooding and power outages following Hurricane Sandy will reduce demand because people are unable to drive or find fuel.
Futures narrowed an increase as terminals and two refineries in New Jersey remain idled a third day after the storm made landfall and as AAA estimated that 35 percent to 40 percent of New Jersey gas stations were operating. Total U.S. supplies rose 935,000 barrels to 199.5 million, the third consecutive increase, according to Energy Department data.
“Gasoline inventories across the country built this week,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Across the Northeast, the fact the terminals can’t supply the service stations is going to result in people not being able to drive. It will be demand destruction by default.”
Gasoline for November rose 0.33 cent to settle at $2.6336 a gallon on the New York Mercantile Exchange. Earlier futures rose as much as 1.6 percent to $2.6726. The fuel surged 23 percent in the third quarter, then sank 17 percent last month.
Futures also pared gains as Colonial Pipeline Co., operator of the largest products pipeline from Gulf Coast refineries to New York Harbor, said Line 3 from North Carolina to New Jersey will return to limited operations tomorrow for the first time since pumping was stopped Oct. 29.
“Colonial is a big part of this,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consultant in London.
Futures rose earlier as the Labor Department reported jobless claims fell 9,000 to 363,000 last week. Companies expanded October payrolls by the most in eight months, according to ADP Research Institute. East Coast stockpiles of gasoline fell last week, Energy Department data show.
“There’s a little bit of a rebound on better-than-expected economic data, the realization we still have terminals down and concerns that imports could be slowed after the storm,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Inventories of gasoline in the East Coast, or Padd 1, fell 202,000 barrels to 47.9 million in the week ended Oct. 26, the department said. Gasoline blending components, which include fuel to be blended with ethanol at terminals before heading to filling stations, fell 216,000 barrels to 40.85 million barrels.
Demand for the motor fuel increased 4.1 percent to 8.84 million barrels a day last week, and over the past four weeks was 0.1 percent higher than a year ago.
Heating oil fell on speculation the power outages in the Northeast will limit demand.
“The homeowner cannot run his heating oil burner without electricity so that has impacted demand in the Northeast until power is restored,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Prices also slipped as European gasoil weakened, reducing the incentive to ship diesel fuel to the U.S. from Europe. November-delivery gasoil fell $13.75 to $944.25 a metric ton at 11:34 a.m. New York time on the ICE Futures Europe exchange in London.
Heating oil for December delivery declined 2.91 cents, or 1 percent, to $3.0332 a gallon, the lowest settlement in six days. Prices sank 3.2 percent last month.
Distillate inventories, which include heating oil and diesel, fell 93,000 barrels to 117.9 million barrels, the lowest level in 17 weeks and 17 percent below a year earlier.
Demand was little changed at 3.54 million barrels a day, and during the past four weeks was down 13 percent from a year ago.
The average nationwide price for regular gasoline at the pump declined 1.4 cents to $3.507 a gallon yesterday, AAA, the largest U.S. motoring organization, said today on its website. That’s the lowest level since July 30. Prices have fallen every day since Oct. 10. The pump price reached a 2012 high of $3.936 on April 4.