Gasoline futures advanced on speculation that wholesalers bought more fuel last week amid concern that higher crude prices will raise gasoline costs.
Futures gained 0.4 cent after earlier falling as much as 1.2 percent. West Texas Intermediate crude rallied to a 16-month high last week, boosting gasoline to the best performance this month in the Standard & Poor’s GSCI index of 24 commodities. Gasoline slid 2.2 percent yesterday on optimism refinery unit shutdowns along the East Coast will soon be resolved.
“I think demand was strong last week and my view is there is going to be a draw in inventories,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “Wholesalers watch the futures.”
August-delivery gasoline settled at $3.0591 on the New York Mercantile Exchange on trading volume that was 3.8 percent below the 100-day average at 3:31 p.m.
Prices rose as high as $3.0826 before paring gains near the 2:30 p.m. close of floor trading.
“It’s not a big move today,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “It’s probably some pretty standard volatility with some market participants looking to mitigate some price surprise tomorrow” after the inventory report, he said.
August gasoline’s premium to September narrowed 0.68 cent to 3.01 cents a gallon, down from 8.13 cents on July 16.
The Energy Information Administration may report tomorrow that gasoline inventories rose 1.8 million barrels last week, according to the median estimate of 11 analysts in a survey by Bloomberg.
The EIA reported that gasoline supplies rose 3.06 million barrels in the week ended July 12 to 224.1 million. Demand sank 6.1 percent from a week earlier, while over the past four weeks it was 2.3 percent above a year ago.
The total inventory increase came as refiners used 92.8 percent of capacity, the highest level in almost a year. 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.
“The selling has dried up but if we keep rates up, we’ll just end up with more products in storage,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Everyone is waiting for the inventory report.”
Gasoline’s crack spread versus WTI widened 17 cents to $19.99 a barrel. The fuel’s premium to Brent gained 18 cents to $18.80 a barrel.
Pump prices, averaged nationwide, fell 0.5 cent to $3.666 a gallon, Heathrow, Florida-based AAA said today on its website.
Ultra-low-sulfur diesel for August delivery gained 0.29 cent to $3.0693 a gallon on volume that was 17 percent below the 100-day average.
ULSD’s crack spread versus West Texas Intermediate crude slipped 13 cents to $21.82 a barrel. The premium over Brent narrowed 11 cents to $20.63.