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Gasoline Rises, Narrowing Biggest Monthly Loss Since October

Feb. 28 (Bloomberg) -- Gasoline rose, trimming the largest monthly decline since October. Crack spreads widened for the first time in four days.

Futures dropped 3.7 percent this month. The March’s contract’s discount to April narrowed 5.27 cents to 19.71 cents a gallon as the U.S. prepares to switch from winter- to summer-grade fuel. The April crack spread, or premium over West Texas Intermediate crude on Nymex, increased 93 cents to $38.64 a barrel. The spread versus Brent crude on the ICE Futures Europe exchange in London was up 71 cents to $19.31. WTI fell 5.6 percent this month and Brent lost 3.6 percent.

“Given the extent of the decline we’ve had, it’s not really very strong,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “It is expiration day. Some may think right now it’s cheap on the street and they can still use winter grade.”

March-delivery gasoline rose 5.81 cents, or 2 percent, to settle at $2.9146 a gallon on the New York Mercantile Exchange on volume that was 38 percent above the 100-day average for the time of day.

The March contract expired today. The more actively traded April futures gained 0.54 cent to $3.1117. April represents summer-grade gasoline, which uses costlier blending components.

Gasoline was the best performer on the Standard & Poor’s GSCI commodity index this year through Feb. 15, gaining 11 percent. Since then, prices have dropped six out of eight days, leaving it up 3.6 percent in 2013.

Refinery Upsets

Prices gained today as two refineries supplying the Chicago market reported issues with production units. Phillips 66 reported an unplanned unit shutdown at its Wood River refinery in Roxana, Illinois. Exxon Mobil Corp. reported a process upset at its Joliet refinery.

“Contract expirations are always kind of sketchy,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “But we had a good pullback in prices and the market may be paying up on expectation of shutdowns. Come April we’re going to get a massive pullback in supply.”

Gasoline at the pump, averaged nationwide, fell 0.4 cent to $3.782 a gallon, AAA said today on its website. Prices are up 15 percent this year.

Heating oil for March delivery fell 1.6 cents, or 0.5 percent, to $2.9719 a gallon on volume that was 24 percent above the 100-day average. Prices declined 5 percent this month, the the biggest monthly drop since May. The April contract fell 2.43 cents to $2.9603.

To contact the reporter on this story: Barbara J. Powell in Dallas at bpowell4@bloomberg.net

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

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