Gasoline Futures Drop as Tropical Storm Dissipates in Atlantic

July 29 (Bloomberg) -- Gasoline fell to the lowest level in almost three weeks as Tropical Storm Dorian degenerated into a tropical wave, easing concern that it would hamper U.S. refining and fuel distribution. Crack spreads narrowed.

Futures slipped 1 percent. Dorian was downgraded by the National Hurricane Center on July 27. Futures rose 0.9 percent on July 26 on concern that Dorian might strengthen and approach the U.S. Gulf, where 45 percent of U.S. refining capacity is located, or the East Coast, including New York Harbor, the delivery point for New York Mercantile Exchange gasoline and diesel contracts.

“Tropical Storm Dorian dissipated over the weekend,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for August delivery fell 3.19 cents to $3.0125 a gallon on the New York Mercantile Exchange, the lowest settlement since July 9. Trading volume was 23 percent below the 100-day average at 3:11 p.m.

August’s premium to the September contract narrowed 0.66 cent to 3.45 cents, indicating less concern that supplies are tightening. Gasoline traded at a 0.37-cent discount to ultra-low sulfur diesel, from a 3.43-cent premium on July 26.

Gasoline’s crack spread versus WTI sank 91 cents to $20.53 a barrel. The fuel’s premium to Brent narrowed $1.34 to $17.63.

Pump prices, averaged nationwide, fell a seventh consecutive day, dropping 0.3 cent to $3.631 a gallon, Heathrow, Florida-based AAA said today on its website. That’s the lowest level since July 14. Prices are 14.6 cents higher than a year earlier.

Ultra-low-sulfur diesel for August delivery rose 0.61 cent to $3.0162 a gallon on trading volume that was 30 percent below the 100-day average.

ULSD’s crack spread versus West Texas Intermediate crude widened 40 cents to $22.25 a barrel. The premium over Brent fell 3 cents to $19.35.

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net