Gasoline sank to the lowest level since January and the crack spread versus West Texas Intermediate crude narrowed as refineries returned from maintenance, boosting inventories.
Prices fell a day after the Energy Information Administration said gasoline supplies and refinery inputs rose last week. Motiva Enterprises LLC is starting a crude unit at Port Arthur, Texas. Chevron Corp. has state approval to start a crude unit at the Richmond, California, plant that’s been shut since August.
“There’s going to be continued pressure on products as refiners return from maintenance,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “I expect the Chevron Richmond crude unit to come back online this week.”
Gasoline for May delivery fell 3.41 cents, or 1.2 percent, to $2.831 a gallon on the New York Mercantile Exchange, the lowest settlement since Jan. 22. Trading volume was 62 percent above the 100-day average at 2:58 p.m. Futures have dropped 12 percent since reaching a 2013 high of $3.2035 on March 8.
The May crack spread versus WTI narrowed 30 cents to $25.39 a barrel. The spread against Brent oil on ICE Futures Europe Exchange gained 9 cents to $14.63.
Total U.S. gasoline inventories rose for the first time in nine weeks, gaining 1.7 million barrels to 222.4 million, according to EIA data. Imports to the East Coast jumped to 804,000 barrels a day, the highest level since August.
“It’s that a-ha moment for gasoline where traders are looking at the upcoming fundamentals and beginning to be concerned about the return to service of some of these big plants like Motiva Port Arthur,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Inventories along the East Coast rose for the first time in five weeks last week as imports jumped 64 percent, according to Energy Information Administration data. East Coast refiners processed the most oil since Nov. 2011.
“Look at PADD 1 runs,” Lebow said. “They’re only 150,000 barrels a day short of full capacity.”
Gasoline also weakened as European gasoline fell to the lowest level this year, which could mean less demand for imports from the U.S. Gasoline stockpiles in Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub rose 9.5 percent in the week through today to the most since May 2008, according to PJK International BV.
“The sentiment is so bearish with the product market looking very weak in the U.S., in Europe, in Asia,” said Amrita Sen, chief oil market strategy at Energy Aspects Ltd, a research company in London. “There doesn’t seem to be enough demand out there.”
Eurobob barges in ARA dropped $16 to $949 per metric ton, according to data compiled by Bloomberg at 12:09 p.m. New York time.
Gasoline at the pump, averaged nationwide, fell 0.8 cent to $3.564 a gallon, AAA said today on its website. Prices have fallen 22.2 cents from the year-to-date high of $3.786 on Feb. 26 and are 35.1 cents below a year ago.
Ultra-low-sulfur diesel for May delivery fell 4.88 cents, or 1.7 percent, to $2.8991 a gallon on volume that was 41 percent above the 100-day average.
Diesel for near-term delivery declined more than later month contracts a day after the EIA reported that East Coast supplies of distillate rose 477,000 barrels to 32.8 million last week. The May contract’s discount to October ULSD widened 1.23 cents to 2.33 cents a gallon.
“The curve is getting destroyed,” Lebow said.