Gasoline slid to a four-week low after the Energy Information Administration reported that stockpiles increased to the highest seasonal level in more than two decades last week.
Futures fell 1.5 percent as gasoline supplies jumped 135,000 barrels to 223.6 million, the highest for this time of year in data going back to 1990. A Bloomberg survey projected a drop of 500,000 barrels. Supplies in the PADD 1B region, which includes New York Harbor, the delivery point of gasoline futures, gained 944,000 barrels, the most since May 10. Gasoline output jumped to a four-week high. Demand expanded 1.1 percent.
“We’re clearly making too much gasoline,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “The demand numbers are actually good. But gasoline production is way too high.”
Gasoline for September delivery fell 4.4 cents to $2.8711 a gallon on the New York Mercantile Exchange, the lowest settlement since July 3. Trading volume was 33 percent above the 100-day average at 5:10 p.m.
Gasoline output rose 0.5 percent to 9.55 million barrels a day, 3.3 percent above a year earlier.
“Refineries are getting back to normal and we’re spitting out gasoline like crazy,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
“High inventory levels combined with no tropical storms on the horizon are pressuring gasoline prices as the driving season winds down over the next few weeks,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The motor fuel’s crack spread versus West Texas Intermediate crude fell a sixth straight day, dropping 92 cents to $16.22 a barrel. Gasoline’s premium over Brent narrowed $1.11 to $13.15.
Gasoline’s decline coincides with a drop in 2013 Renewable Identification Numbers, or RINs, easing concern that higher costs to blend ethanol would curb fuel supply.
RINs sank 17 percent to 74 cents today, the lowest level since April 29, data compiled by Bloomberg show. Refiners must buy the credits in lieu of blending ethanol into gasoline to meet federal rules. The Environmental Protection Agency gave refiners and blenders more time yesterday to meet the requirement and more flexibility in how they meet it.
“When RIN numbers come down, the market seems to come off,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Pump prices, averaged nationwide, slipped 0.8 cent to $3.60 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 3.4 cents below a year ago.
Distillate inventories, including diesel and jet fuel, rose 469,000 to 126.5 million barrels, according to EIA data. Demand fell 103,000 barrels to 3.87 million a day, a three-week low.
Ultra-low-sulfur diesel for September delivery declined 4.41 cents, or 1.5 percent, to $2.9642 a gallon on trading volume that was 36 percent above the 100-day average.
ULSD’s crack spread versus West Texas Intermediate crude slipped 92 cents to $20.l3 a barrel. The premium over Brent fell $1.11 to $17.06.