Gasoline fell after three days of rising prices on higher-than-average inventories near the end of the summer driving season and as concerns that tropical disturbances would disrupt supply receded.
Futures pared the week’s gain to 2 percent. Gasoline supplies are seasonally the highest since 2010, according to Energy Information Administration data. Tropical Depression Erin was downgraded from a tropical storm while a ragged collection of rain showers off the Yucatan Peninsula may develop into a weak tropical system as it moves over the Gulf of Mexico.
“Gasoline inventories are still 9 percent higher than this time last year as we near the end of the driving season,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Part of the drop is due to the fact that there will be minimal impact to supplies from the tropical disturbance in the Gulf of Mexico and the trajectory of Tropical Storm Erin is well away from the Gulf Coast.”
Gasoline for September delivery fell 1.7 cents, or 0.6 percent, to settle at $2.9675 a gallon on the New York Mercantile Exchange on trading volume that was 17 percent below the 100-day average at 3:20 p.m.
The low-pressure area in the southwestern Gulf has a 50 percent chance of becoming tropical in the next two days, according to the U.S. National Hurricane Center in Miami. The exact track of the system is uncertain, according to the hurricane center. A westward path would mean better chance of growth than a northerly one would.
Erin, which is about 530 miles (853 kilometers) west of the Cape Verde Islands in Africa, was dropped from tropical-storm status when its maximum sustained winds fell to 35 mph from 40 mph. It is expected to drift through the mid-Atlantic far from land before breaking up sometime next week.
The motor fuel’s crack spread versus West Texas Intermediate crude narrowed 84 cents to $17.18 a barrel. October gasoline’s premium over Brent slid $1.14 to $9.15 a barrel.
Pump prices, averaged nationwide, climbed 0.2 cent to $3.541 a gallon, Heathrow, Florida-based AAA said today on its website. It was the first increase this month.
Ultra-low-sulfur diesel for September delivery rose 1.03 cents, or 0.3 percent, to $3.0831 a gallon on the Nymex, the highest settlement since Aug. 1. Prices gained 3 percent this week. Trading volume was 30 percent below the 100-day average.
ULSD’s crack spread versus West Texas Intermediate crude gained 30 cents to $22.03 a barrel. The October contract’s premium over Brent slipped 34 cents to $19.40 a barrel.