Gasoline rose for the first time in five days, narrowing a weekly loss, after U.S. economic data signaled improvement in demand.
Futures gained 0.7 percent as U.S. industrial production increased 0.7 percent in February, the most in three months, Federal Reserve data showed. Manufacturing, which accounts for about 75 percent of industrial output, advanced 0.8 percent for the third month in the past four. The fuel’s premium to crude rose for the first time this week and heating oil was higher.
“Products are leading the way on the back of better economic data portending growth in demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for April delivery increased 2.25 cents to settle at $3.1638 a gallon on the New York Mercantile Exchange. Trading volume was 21 percent below the 100-day average for the time of day. The contract is for reformulated gasoline to be blended with ethanol, or RBOB. Prices declined 1.2 percent this week, the first drop since Feb. 22.
Gasoline demand in the week ended March 8, measured by deliveries to wholesalers, increased 3.1 percent and over the past four weeks was 1.1 percent above a year earlier, according to Energy Information Administration data.
“We’re getting a boost off economic optimism,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The manufacturing data is another sign the economy is improving and will play into the better-demand scenario the market is trying to price in.”
The April crack spread versus West Texas Intermediate crude oil widened 52 cents to $39.43 a barrel. The May spread against Brent oil on ICE Futures Europe Exchange widened 0.5 cent to $22.49.
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 17.1 percent for crude. That’s up from 19.9 percent for gasoline on Feb. 25, when crude volatility was 15.5 percent.
Volatility in gasoline is also higher amid swings in the cost of Renewable Identification Numbers for 2013 vintage that refiners must buy in lieu of blending ethanol into gasoline. The price of 2013-vintage RINs fell 8 cents to 78.5 cents yesterday, according to data compiled by Bloomberg.
Gasoline prices touched $3.1783 a gallon at 9:17 a.m., then narrowed gains after the release of the Thomson Reuters/University of Michigan preliminary consumer sentiment index for March showed a decline to 71.8, the lowest level since December 2011, from 77.6 in February. Equities fell after the report.
“Consumer sentiment is not good and equity markets went down with it,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market continues to get battered back and forth by the economic numbers that come out. And this is the volatile season for gasoline.”
Heating oil for April delivery gained 0.95 cent to $2.939 a gallon on volume that was 29 percent below the 100-day average for the time of day. Prices dropped 1.2 percent this week and have fallen four of the past five weeks.
Gasoline at the pump, averaged nationwide, fell 0.6 cent to $3.695 a gallon, AAA said today on its website. Prices are 12.6 cents below a year ago and have dropped 9.1 cents from the year-to-date high of $3.786 on Feb. 26.