Gasoline tumbled to a five-week low as inventories fell less than expected and production increased. Crack spreads narrowed.
Futures sank 4.2 percent. The Energy Information Administration said gasoline stockpiles fell by 572,000 barrels to 220.7 million in the week ended March 29. The median estimate of 12 analysts surveyed by Bloomberg was a 1 million drop. Gasoline output rose to 8.95 million barrels a day, the most in four weeks. Money managers held the biggest net-long gasoline futures and options position in a month as of March 26.
“I think we got a big increase in production coupled with a fairly high commitment of traders on the long side,” said Andrew Lebow, a senior vice president for Jefferies Bache LLC in New York. “Add the two together, and it’s a blend for liquidation.”
Gasoline fell 12.68 cents to $2.914 a gallon on the New York Mercantile Exchange, the lowest settlement since Feb. 27. Volume was 80 percent greater than the 100-day average at the 3:19 p.m.
Hedge funds and other large speculators increased bullish U.S. gasoline wagers by 2,326 futures and options combined, or 3 percent, to 80,127, according to the Commodity Futures Trading Commission’s March 29 Commitments of Traders report. It was the largest gain since the week ended Feb. 5.
The drop in gasoline was part of a broader commodity decline. The Standard & Poor’s GSCI Index of 24 materials sank to the lowest level since December, retreating 2 percent at 3:49 p.m. Ontario Teachers’ Pension Plan, Canada’s third-biggest retirement-fund manager, said yesterday it posted a 1.9 percent loss on commodities last year. In October, the California Public Employees’ Retirement System reduced its commodity holdings by 55 percent.
“People see Calpers start exiting late last year, they see Ontario losing money,” said Carl Larry, a commodities broker at Atlas Commodities LLC in Houston. “Once somebody sees them leading, they follow, especially in that industry.”
Gasoline’s crack spread versus Brent crude on ICE Futures Europe slipped $1.74 to $15.28 a barrel. The fuel’s premium over West Texas Intermediate dropped $2.58 to $27.94 a barrel.
Refiners in the U.S. increased the amount of crude they processed by 130,000 barrels to 15 million barrels a day, the highest level since Jan. 11, according to the EIA, the statistics arm of the Energy Department.
“People are factoring in some refineries coming back online, and we’ve yet to see any pick-up in demand,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “People are watching to see whether when the weather warms up people are going to start getting back in their cars.”
The number of gasoline cargoes booked on tankers for shipment to the U.S. after loading at ports in northwest Europe will expand in the next two weeks, according to a Bloomberg survey.
Traders will charter a total of 34 Medium Range vessels for loading within the 14 days to April 16, according to the median in the survey yesterday of five shipbrokers and traders specializing in shipments of the auto fuel. That compares with 20 tankers in the corresponding survey last week.
Distillate inventories, including diesel and heating oil, sank 2.27 million barrels to 113 million, EIA data show.
Ultra-low-sulfur diesel for May delivery fell 8.54 cents, or 2.8 percent, to $3.002 a gallon on the Nymex, on volume that was 10 percent above average. It was the biggest decline since Nov. 7.
The fuel’s crack spread versus WTI shrank 85 cents to $31.63 a barrel, and against Brent weakened 1 to $18.97.
Gasoline at the pump, averaged nationwide, rose 0.3 cent to $3.64 a gallon, AAA said on its website yesterday. Prices are the lowest for this time of year since 2010.