Gasoline fell for the first time in four days and crack spreads narrowed on speculation that supplies will increase as refiners return units to production after maintenance.
Futures sank 1.1 percent as Valero Energy Corp. said it’s increasing rates on the fluid catalytic cracker at its Meraux refinery in south Louisiana. The fuel’s crack spread versus West Texas Intermediate narrowed 82 cents to $23.38 a barrel, while the spread to Brent fell 30 cents to $14.60.
“Right now gasoline production is in high gear and will outpace relatively weak demand in the short term,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Gasoline for June delivery fell 3.23 cents to $2.8334 a gallon on the New York Mercantile Exchange. Trading volume was 18 percent below the 100-day average at 3:31 p.m.
The Energy Information Administration said today in its monthly short-term outlook that gasoline consumption this year will average 8.68 million barrels a day, lower than the 8.69 million in last month’s projection. Demand in 2014 may be 8.69 million barrels a day, down from last month’s forecast of 8.7 million.
The EIA will probably report that U.S. gasoline supplies dropped 475,000 barrels last week, according to the median of 12 analyst estimates compiled by Bloomberg. The average withdrawal from storage for this week during the past five years is 1.5 million, EIA data show.
Ultra-low-sulfur diesel futures rose to a three-week high as gasoil jumped on the ICE Futures Europe exchange, indicating greater demand for distillate exports from the U.S.
“Europe continues to attract exports and higher prices mean it will attract more distillate exports to meet their demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Ultra-low-sulfur diesel for June delivery rose 0.75 cent to settle at $2.9277 a gallon on the Nymex. Trading volume was 20 percent above the 100-day average at 3:10 p.m. Prices have climbed 5 percent in four days.
ULSD’s crack spread versus WTI widened 85 cents to $27.34 a barrel. The premium over Brent increased $1.37 to $18.56.
“It’s also getting support on talk of strong demand for U.S. planting,” Flynn said.
Gasoil for delivery in May gained $9.75, or 1.1 percent, to $868.50 a metric ton, while the more actively traded June contract increased $9 to $871.75. Trading volume on all gasoil contracts was 65 percent above the 100-day average.
Gasoline at the pump, averaged nationwide, rose 0.4 cent to $3.525 a gallon, AAA said today on its website. Prices, which reached a year-to-date high of $3.786 on Feb. 26, and are 25.2 cents below a year ago.