Gasoline retreated from a four-month high as U.S. inventories increased unexpectedly and demand for the motor fuel declined.
Futures retreated as the Energy Information Administration reported that gasoline supplies rose 3.06 million barrels last week to 224.1 million. A Bloomberg survey projected a drop of 1.5 million barrels. Demand sank 6.1 percent from a week earlier, while over the past four weeks it was 2.3 percent above a year ago.
“A big product build in early July is not positive,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “The four-week demand numbers are still positive but the leading-edge numbers are down.”
August-delivery gasoline fell 2.42 cents, or 0.8 percent, to settle at $3.1101 a gallon on the New York Mercantile Exchange. Trading volume was 28 percent above the 100-day average at 3:31 p.m.
Gasoline’s crack spread versus WTI fell $1.50 to $24.14 a barrel. The fuel’s premium to Brent fell $1.10 to $18.99.
Supplies on the Gulf Coast, home to 45 percent of U.S. refining capacity, rose 2.06 million barrels to 78.2 million, the highest level in five months, according to EIA data.
The total inventory increase came as refiners processed a seasonal record amount of crude and other feedstocks last week. Gasoline output fell 5.6 percent to 9.05 million barrels a day, the lowest rate in seven weeks, as refiners shut process units for unplanned outages. Valero Energy Corp. shut a fluid catalytic cracker last week at its refinery in Port Arthur, Texas, and the unit remains closed for repairs.
Before today, gasoline futures had jumped 14 percent in July as refineries from Philadelphia to Texas shut units and as West Texas Intermediate crude surged above $100 a barrel.
Pump prices, averaged nationwide, rose a ninth consecutive time, gaining 2.2 cents to $3.657 a gallon, Heathrow, Florida-based AAA said today on its website. That’s the highest level since May 22.
“Most of us were looking for draws in gasoline,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “I think that next week you will see a sharp draw. Wholesalers and consumers are going to want to get ahead of these price increases.”
Ultra-low sulfur diesel rose as Federal Reserve Chairman Ben S. Bernanke in prepared testimony to the House Financial Services Committee said the central bank’s asset purchases “are by no means on a present course” and could be reduced or expanded as economic conditions warrant. His statements eased concern that central-bank stimulus would be tapered off soon.
“There is no timetable,” Pursell said.
Ultra-low-sulfur diesel for August delivery rose 2.43 cents, or 0.8 percent, to $3.0712 a gallon, the highest settlement since April 2. Trading volume was 3.3 percent above the 100-day average.
Distillate inventories rose 3.87 million barrels to 127.7 million, the highest level since Feb. 1, the EIA said.
ULSD’s crack spread versus West Texas Intermediate crude widened 54 cents to $22.51 a barrel. The premium over Brent increased 55 cents to $20.36.