Gasoline fell the most since May 1 after reports that the deadly tornado near Oklahoma City yesterday didn’t disrupt area refinery operations.
Futures declined as Oklahoma Gas & Electric said it wasn’t aware of any storm-related refinery failures. Phillips 66 said there was no impact at its Ponca City plant and Valero Energy Corp. said the Ardmore refinery was operating normally. Total U.S. gasoline supplies in the week ended May 10 were seasonally the highest in three years, according to Energy Information Administration data. Prices at the pump have jumped 13.4 cents since May 4, ahead of the May 27 U.S. Memorial Day holiday.
“We haven’t seen any refineries that have lost power and fundamentals aren’t supportive of any gains,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We don’t really have strong demand and gasoline prices have jumped.”
Gasoline for June delivery slid 5.98 cents to settle at $2.8458 a gallon on the New York Mercantile Exchange, the lowest settlement in five days. Trading volume was 21 percent above the 100-day average at 3:04 p.m.
The fuel’s crack spread versus WTI narrowed $1.96 to $23.36 a barrel. July gasoline’s premium over July Brent fell $1.40 to $15.28.
Gasoline at the pump, averaged nationwide, rose 0.1 cent to $3.654 a gallon, Heathrow, Florida-based AAA, the nation’s largest motoring organization, said today on its website. Prices have climbed since May 4 to the highest level since March 25 and are 3.5 cents below a year earlier.
The Memorial Day holiday is traditionally the beginning of the peak summer U.S. driving season.
Gasoline demand dropped 4.7 percent in the three weeks ended May 10 and is seasonally the lowest since 2001, according to EIA data.
“Demand hasn’t been very good and with prices going up before Memorial Day that could act as a deterrent for demand,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “If there’s no supply disruption, there’s very little support for gasoline right now.”
The Energy Information Administration will probably report tomorrow that gasoline inventories fell 300,000 barrels last week, according to the median estimate of 11 analysts in a survey by Bloomberg.
The survey projected that refineries probably raised operating rates for a fourth straight week to 88.5 percent, the highest level since Jan. 4, according to EIA data.
“Gasoline is going to be under pressure as we move into Memorial Day weekend,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “You will see refinery utilization increase as refineries return from maintenance and, in turn, gasoline production goes up.”
Ultra-low-sulfur diesel for June delivery fell 2.18 cents, or 0.7 percent, to settle at $2.929 a gallon on the Nymex on trading volume that was 26 percent below the 100-day average at 3:09 p.m.
The fuel’s crack spread versus West Texas Intermediate crude oil narrowed 37 cents to $26.86 a barrel a barrel. July ULSD’s premium over Brent fell 3 cents to $18.70.