Gasoline settled little changed after dropping as much as 1.4 percent amid speculation that strong refining margins will spur production. The fuel’s premium to crude shrank for a fourth day.
Futures fell 0.1 cent. Gasoline output rose 4 percent to 8.95 million barrels a day last week even as refiners processed the least amount of oil in almost two years, Energy Information Administration data show. The April crack spread versus WTI slipped 56 cents to $38.90 a barrel today, down from a record $44.03 Feb. 22. The May spread against Brent oil on ICE Futures Europe Exchange narrowed 81 cents to $22.49.
“Despite refinery runs below 14 million barrels a day, gasoline output increased,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “Crack spreads are signaling the incentive to produce gasoline. We’re now at peak maintenance. From here on more refineries should be returning from maintenance and supplies should rise.”
Gasoline for April delivery settled at $3.1413 a gallon on the New York Mercantile Exchange, the lowest level since March 7. Trading volume was 8 percent below the 100-day average for the time of day. The contract is for reformulated gasoline to be blended with ethanol, or RBOB.
Total U.S. gasoline inventories fell 3.57 million barrels last week to 224.3 million, the lowest level in 11 weeks and fifth consecutive decline, according to EIA data. Imports to the East Coast jumped 20 percent to 718,000 barrels a day, the highest level since August.
Gasoline demand, measured by deliveries to wholesalers, increased 3.1 percent to 8.63 million barrels a day, and over the past four weeks was 1.1 percent above a year earlier.
“The expectations around supply and demand have seen big swings,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “There are a lot bigger draws and divergent views on what wide cracks will mean for supplies and when it will mean it. Gasoline is going through a seasonal transition.”
Gasoline volatility has increased even as crude oil has moved little. The 30-day average historical volatility for RBOB was 33.1 percent today compared with 14.7 percent for crude. That’s up from 19.9 percent on Feb. 25, when crude volatility was 15.5 percent.
Volatility in gasoline is higher amid swings in the cost of Renewable Identification Numbers for 2013 vintage, or RINS, that refiners must buy in lieu of blending ethanol into gasoline. The price of 2013-vintage RINs gained 9 cents to 86.5 cents yesterday, according to data compiled by Bloomberg.
“There’s a tremendous amount of confusion in the market,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “This RIN thing is a complete unknown variable. Is it a good thing? Is it a bad thing? Is it a wash?”
Heating oil for April delivery gained 0.53 cent to $2.9295 a gallon on volume that was 6.4 percent below the 100-day average for the time of day.
Gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.701 a gallon, AAA said today on its website. Prices are 11 cents below a year ago.