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Gasoline Falls, Spreads Weaken as East Coast Supplies Increase

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Feb. 7 (Bloomberg) -- Gasoline dropped and the March-April spread weakened for a sixth day on speculation imports to the East Coast may increase stockpiles.

Gasoline sank 1.9 percent. March gasoline’s discount to April increased 1.84 cents to 20.08 cents a gallon. Supplies of the motor fuel in the area around New York Harbor jumped 12 percent last week, government data show. Gasoline cargoes from Europe may reach the highest level since November in the next two weeks, a Bloomberg survey showed. Imports last week were the highest since Sept. 7, government data show.

“I would suspect that imports can increase versus statistics last week by up to 200,000 barrels a day because of the increase in ships coming from Europe to the East Coast,” Thomas Finlon, director of Energy Analytics Group Ltd., said in a phone interview from Jupiter, Florida.

Gasoline futures sank 3.98 cents to settle at $2.9999 a gallon on the New York Mercantile Exchange. Volume was 77 percent higher than 100-day average at 4:50 p.m.

The March gasoline crack spread narrowed 88 cents to $30.17 a barrel versus West Texas Intermediate crude on Nymex, and $2.18 to $8.76 versus Brent on ICE Futures Europe exchange.

The widening March-April spread indicates near-term supplies of fuel are adequate. The March contract represents winter-grade fuel, which is easier to produce, while the April contract is for summer-grade gasoline.

28 Tankers

Traders and oil companies will charter 28 tankers to load gasoline in the two weeks to Feb. 20, according to the median estimate in a survey yesterday of eight shipbrokers and traders specializing in the market. That would be the highest number of bookings since Nov. 21.

Imports of the motor fuel to the East Coast jumped 9.4 percent last week to 666,000 barrels a day, Energy Information Administration data show.

Delta Air Lines Inc. restarted a fluid catalytic cracker at its 185,000-barrel-a-day Trainer refinery in Pennsylvania, Trebor Banstetter, a spokesman for Delta in Atlanta, said by phone. The refinery has 75,000 barrels a day of catalytic cracking capacity, according to data compiled by Bloomberg.

“The Delta Trainer cat cracker started as a short-term thing and turned into 40-day outage and the market continued to wait to see it restart,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “It improves the supply situation in New York Harbor.”

Sandy Memories

A nor’easter that threatens to drop 2 feet of snow starting tomorrow across eastern Massachusetts and almost a foot in New York City may reduce demand for transportation fuels in the Northeast. The last major storm, Hurricane Sandy, disrupted fuel refining and distribution around New York and New Jersey.

“People are still concerned about what happened during Hurricane Sandy, and they’re thinking the worst,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “That’s probably going to cause a more-than-expected decline in gasoline demand in the Northeast.”

Heating oil for March delivery rose 1.37 cents to $3.1995 a gallon on volume that’s 15 percent above average.

The March crack spread widened $1.37 to $38.55 a barrel versus WTI and 7 cents to $17.14 versus Brent.

Gasoline at the pump, averaged nationwide, rose 0.9 cent to $3.555 a gallon, AAA said on its website today. That’s the highest price for gas at the pump since Oct. 25.

To contact the reporters on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net; Christine Harvey in New York at charvey32@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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