Gasoline rose to the highest level in three months on speculation refinery maintenance will keep supplies along the U.S. East Coast below normal.
Futures gained as work was set to begin at the largest refinery supplying New York Harbor. Supplies in PADD 1 as of Jan. 11 were at the lowest seasonal level since 2006, Energy Information Administration data show. April futures climbed more than February and March contracts on speculation refinery maintenance will accelerate heading into spring.
Between now and May, an average 1.5 million barrels a day of U.S. refinery capacity will be shut for maintenance, according to Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London. “The heavy maintenance season is coming. The peak is March and April,” Sen said.
Gasoline for February delivery rose 0.39 cent to $2.8338 a gallon on the New York Mercantile Exchange, the highest settlement since Oct. 16. Volume was 15 percent above the 100-day average.
February gasoline and heating oil contracts will expire at the close of floor trading Jan. 31. The more actively traded March gasoline contract climbed 0.78 cent to $2.8489.
The March gasoline crack spread versus West Texas Intermediate widened $1.77 to $24.42 a barrel while declining 6 cents to $6.85 a barrel against Brent.
The discount of March contracts versus April increased 0.94 cent to 16.28 cents a gallon. March futures represent winter-grade fuel, while April-delivery contracts are for summer-grade fuel, which is typically more expensive because it has to meet more-stringent emissions regulations.
“April represents summer-grade gasoline,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “It’s a spread that is representing the difference in quality.”
Philadelphia Energy Solutions plans to shut the Girard Point section of the largest plant near New York Harbor, the delivery point for gasoline futures, this month, and a fluid catalytic cracker at Delta Airlines Inc.’s Trainer, Pennsylvania, refinery has been shut for repairs since December.
The EIA is scheduled to report last week’s inventories at 11 a.m. tomorrow. The report will probably show that gasoline supplies rose 1.25 million barrels and distillate stockpiles were unchanged, according to the median estimate of 10 analysts in a survey by Bloomberg.
The National Weather Service’s Climate Prediction Center estimated lower-than-normal temperatures in the Northeast from Jan. 31 to Feb. 6. The region accounts for about 80 percent of households that use heating oil, according to the EIA.
Heating oil for February delivery gained 0.99 cent to $3.0781 a gallon on the exchange. The March contract increased 0.95 cent to $3.0652. Volume was 25 percent below average.
The March crack spread versus WTI increased $1.85 to $33.51 a barrel.
The retail price for regular gasoline, averaged nationwide, rose 0.6 cent to $3.316 a gallon, AAA said today on its website. That’s the sixth consecutive increase.