Gasoline fell for a second consecutive week as Brent crude weakened versus West Texas Intermediate oil. April’s premium over later months slipped on speculation supplies will increase.
Futures dropped 3.2 percent this week and lost 0.3 percent today as the premium for Brent, the pricing basis for gasoline imports, narrowed versus WTI to the lowest intraday level since July. April gasoline’s premium to May futures, which began the month at 4 cents, was 1.13 cents today.
“You’ve seen a stark flattening of the RBOB curve,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “It’s a bearish signal. It means concern about supply is beginning to wane.” We’re winding down the maintenance season right now.’’
Gasoline for April delivery fell 0.81 cent to $3.0625 a gallon on the New York Mercantile Exchange. Trading volume was 22 percent below the 100-day average at 3:15 p.m.
April’s premium to the September contract, which began the month at 28.53 cents, slipped 0.82 cent today to 18.48 cents.
The premium for Brent crude on ICE Futures Europe slipped $1.07 to $13.95 a barrel over WTI. The May gasoline crack spread versus WTI narrowed $1.62 to $34.44 a barrel, and the spread to Brent dropped 55 cents to $20.49.
Gasoline volatility has increased even as crude oil has moved little. The 30-day average historical volatility for RBOB was 34.3 percent today compared with 15.8 percent for crude. That’s up from 19.9 percent for gasoline on Feb. 25, when crude volatility was 15.5 percent.
“The only thing really moving in the market is the Brent-WTI spread,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “And gasoline is very volatile.”
The Energy Information Administration reported that U.S. refiners processed the most oil in two months in the seven days ended March 15, indicating that the peak of spring maintenance may be past and inventories will rise.
Heating oil for April delivery declined 1.2 cents, or 0.4 percent, to $2.8843 a gallon on volume that was 30 percent below than the 100-day average. Futures dropped 1.9 percent this week.
Gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.686 a gallon, AAA said today on its website. Prices have dropped 10 cents since reaching a 2013 high of $3.786 on Feb. 26 and are 19.5 cents below a year ago.