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Gasoline Slides to Four-Week Low as Refineries Restart Units

Aug. 5 (Bloomberg) -- Gasoline slid to the lowest level in almost four weeks on concern that refinery restarts may increase supplies that are already the highest for this time of year in more than two decades.

Futures sank 1.5 percent, the biggest drop since June 22, as Valero Energy Corp. started a fluid catalytic cracker at its Port Arthur, Texas, site. Irving Oil Corp.’s New Brunswick, Canada, plant may restart units as soon as this week after unplanned work. The summer driving period extends through the U.S. Labor Day holiday, which falls on Sept. 2 this year.

“There’s some additional pressure on gasoline after the return to service of the Valero Port Arthur cat cracker, and the market is anticipating the return of some processing units at the oil refinery in Saint John,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for September delivery declined 4.41 cents to $2.9506 a gallon on the New York Mercantile Exchange, the lowest settlement since July 9. Trading volume was 12 percent above the 100-day average.

September gasoline’s premium to October futures narrowed 1.21 cents to 12.69 cents a gallon, indicating less immediate concern about supply. September gasoline’s discount to ultra-low-sulfur diesel widened 2.49 cents to 10.16 cents.

“The market seems to have lost some of its luster the last week and a half and considering where we are in the month, that’s where the speculators are, in the September contract,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline Inventories

Inventories nationwide rose 770,000 barrels to 223.5 million in the week ended July 25, seasonally the highest in data going back to 1990, the Energy Information Administration reported July 31. Stockpiles in the PADD 1B region, which includes New York Harbor, the delivery point of Nymex gasoline and ultra-low-sulfur diesel contracts, grew by 537,000 barrels to 29.5 million.

“There’s only four more weeks in the driving season and we have plenty of supply,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.

Gasoline’s crack spread versus West Texas Intermediate crude narrowed a fourth straight day, falling $1.47 to $17.37 a barrel, the lowest since July 2. Gasoline’s premium over Brent narrowed $1.60 to $15.23.

Pump Prices

Pump prices, averaged nationwide, slipped 0.3 cent to $3.614 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 0.4 cent higher than a year ago.

Ultra-low-sulfur diesel for September delivery declined 1.92 cents, or 0.6 percent, to $3.0522 a gallon on trading volume that was 20 percent below the 100-day average.

ULSD’s crack spread versus West Texas Intermediate crude slipped 43 cents to $21.63 a barrel. The premium over Brent fell 56 cents to $19.49.

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

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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