Gasoline futures fell the most in three months, deepening losses as crude tumbled on speculation that a large commodity hedge fund was forced to liquidate.
March-delivery gasoline slid 2 percent. Oil in New York sank 2.3 percent and the Standard & Poor’s GSCI index of 24 commodities slipped 1.4 percent. Gasoline is the index’s second best performer this year, after cotton, amid concern refinery shutdowns will tighten supply.
“Gasoline was overvalued,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Although we are in the midst of a heavy turnaround season, refinery maintenance season is peaking over the next few weeks and supplies are expected to increase in March.”
March gasoline declined 6.17 cents to settle at $3.0595 a gallon on the New York Mercantile Exchange, the biggest loss since Nov. 7 and the first time futures have fallen two consecutive days since Dec. 6. Volume was 22 percent above the 100-day average for the time of day.
Futures touched $3.0304, 13.87 cents below yesterday’s intraday high of $3.1691.
“There’s a rumor a large macro commodity fund is being forced to liquidate and you’re seeing a selloff both in industrial metals complex as well as in oil,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.
Retail gasoline, averaged nationwide, rose 1.8 cents to $3.766 a gallon, the highest level since Oct. 15, AAA said today on its website.
Pump prices have gained every day since Jan. 17, advancing 47.3 cents. The average has jumped 14 percent this year to within 17 cents of last year’s high of $3.936 that was reached on April 4. Prices may peak earlier than they did last year, Avery Ash, a spokesman for AAA, the nation’s largest motoring organization, said in an interview yesterday.
“You’re going to see retail gas prices run up the rest of this week as they catch up with the rise in futures and then they should taper off,” said Lipow.
Seasonal repairs, which typically peak in March and April, have combined with unit breakdowns to raise concern about supply levels when the nation switches to summer-grade fuel, which is more expensive to produce, in April.
The jump in gasoline futures has swollen the crack spread, a measure of refining profit. April-delivery gasoline’s premium versus Brent crude on ICE Futures Europe exchange was down 46 cents to $21.26 a barrel.
The Energy Information Administration will probably report tomorrow that U.S. gasoline inventories fell a second week, dropping 900,000 barrels, according to the median estimate of 11 analysts in a survey by Bloomberg.
“People are concerned generally about the level of supply but with these level of margins, when the refiners come back online after maintenance they will max out their level of gasoline production,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London.
Prices also slipped on concern that higher prices will slow demand. Deliveries to U.S. wholesalers in the week ended Feb. 8 were 2.9 percent above a year earlier, according to EIA data.
“We’re right in the teeth of major maintenance and prices rallied into it,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “We’ve had a good start to the year for demand, demand up over 350,000 barrels a day on the four-week average as of Feb. 8. It’s hard to see how that rate of growth is going to continue given these higher prices.”
Heating oil for March delivery fell 2.43 cents, or 0.8 percent, to $3.1563 a gallon on the exchange on volume that was 7.2 percent below the 100-day average.
Distillate inventories, including heating oil and diesel, probably declined 1.8 million barrels, according to the survey.