Gasoline futures advanced as refinery maintenance spurred concern that supplies will be limited and after OPEC forecast stronger fuel demand in emerging economies. Calendar spreads weakened.
Gasoline for March delivery rose 1 percent. Refineries are cutting crude runs in the midst of seasonal work. The Organization of Petroleum Exporting Countries raised its global oil demand estimate by 80,000 barrels a day from last month’s report. The March contract’s discount to April increased to the widest contango since Feb. 29.
“We are in midst of refinery turnaround season, which peaks over the next two weeks,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The market may feel they’re expecting a decline in gasoline inventories over the next couple of weeks to support higher prices.”
Gasoline for March delivery rose 2.91 cents to settle at $3.0503 a gallon on the New York Mercantile Exchange. Volume was 12 percent above the 100-day average as of 4:19 p.m.
The gap between March futures, which represent winter-grade gasoline, and April’s contract for summer-grade fuel, increased 0.63 cent to 21.04 cents a gallon.
Refineries cut crude rates by 0.3 percent to 14.4 million barrels a day in the week ended Feb. 1, the Energy Department said Feb. 6. Crude runs are down 826,000 barrels a day from the first week of 2013.
Royal Dutch Shell Plc had a small fire at 9:30 a.m. in a unit at its 340,000 barrel-a-day refinery in Deer Park, Texas, Kimberly Windon, a Houston-based spokeswoman for the company, said by e-mail.
Western Refining Inc. began a turnaround on the north side of its El Paso, Texas, refinery yesterday. Philadelphia Energy Solutions began shutting units at its 355,000-barrel-a-day refinery in Pennsylvania for 60 days of planned work on Jan. 30, according to a person familiar with the situation.
Global oil demand will increase this year by 800,000 barrels a day, or 0.9 percent, to 89.7 million, OPEC said, with China accounting for 400,000 barrels a day of the growth.
“The OPEC report marked demand up, and overall that’s been constructive to energy markets,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “That’s been the backbone of this particular rally.”
Growth in gasoline exports is needed to offset stagnant demand in the U.S., said Matt Tormollen, president and chief executive officer of FuelQuest Inc., a Houston-based firm that manages fuel for companies such as Costco Wholesale Corp., FedEx Corp. and 7-Eleven Inc.
“Demand is going to continue to lighten, which means exports will increase,” Tormollen said in an interview at Bloomberg’s office in San Francisco. “Our general outlook is that gasoline demand, as it has for the last few years, will continue to slacken. Hybrids, better gas mileage and electric vehicles are all going to soften demand for gasoline even if the economy gets better.”
Gasoline consumption in the U.S. this year will average 8.73 million barrels a day, the Energy Department’s Energy Information Administration said today in its monthly Short-Term Energy Outlook today. That’s the same as in last month’s projection and below the level of 8.75 million in 2011. Demand in 2014 could slip to 8.72 million barrels a day, the EIA said.
The U.S. has exported about 484,000 barrels of gasoline a day for the past three weeks, the highest level since March, EIA data show.
Gasoline at the pump, averaged nationwide, rose 1.7 cents to $3.604 a gallon, AAA said on its website today. Prices have climbed 9.5 percent since the beginning of 2013.
March-delivery heating oil rose 0.47 cent to settle at $3.2362 a gallon on the Nymex on volume 2.7 percent below the 100-day average.
Distillate demand, including heating oil and diesel, will be 3.77 million barrels a day this year, the EIA said, down from the last month’s outlook of 3.8 million. Consumption in 2014 is estimated to be 3.83 million barrels, the same as last month’s projection.