Gasoline Jumps to Three-Week High as Outages May Reduce Stocks

Aug. 23 (Bloomberg) -- Gasoline jumped to a three-week high on speculation unplanned refinery shutdowns from Canada to Texas may reduce supplies before the Sept. 2 U.S. Labor Day holiday.

Futures rose 1.4 percent after Irving Oil Corp.’s Saint John refinery in New Brunswick shut a fluid catalytic cracker, according to Genscape Inc., a Louisville, Kentucky-based energy information provider. Motiva Enterprises LLC reduced rates at its Convent, Louisiana, and Port Arthur, Texas, plants after fires shut units.

“The market is very nervous going into the weekend because of all these refinery issues,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

Gasoline for September delivery rose 4.24 cents to $3.0072 a gallon on the New York Mercantile Exchange on trading volume that was 14 percent above the 100-day average. Prices climbed 1.3 percent this week and have declined 1.2 percent this month.

Gasoline’s discount to ultra-low-sulfur diesel narrowed 1.73 cents to 8.78 cents, the smallest gap since Aug. 14.

Total U.S. gasoline inventories fell 4.03 million barrels last week, according to the Energy Information Administration. Supplies on the East Coast, which includes New York Harbor, the delivery point for gasoline and diesel contracts, slipped 2.74 million barrels to 58.5 million, the lowest since March 29.

A fluid catalytic cracker at Delta Air Lines Inc.’s Monroe Energy LLC refinery in Trainer, Pennsylvania, shut yesterday, company spokesman Adam Gattuso said today. The unit should be back up within two days, he said.

Refineries Offline

“We saw a big draw in gasoline this week, there’s the idea that some refineries are offline and next weekend is a holiday,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline widened gains as part of a broader commodity rally after a plunge in July new-home sales by the most in more than three years increased speculation that the Federal Reserve would leave its $85 billion bond-buying program intact for the immediate future.

“Poor economic data pushes back expectations of when tapering will come,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London. “The oil complex is moving roughly in sync on this with gasoline getting an extra boost from a succession of refinery outages over the past couple of weeks.”

The Standard & Poor’s GSCI index of 24 commodities gained 1 percent at 3:44 p.m. in New York.

Crack Spreads

The motor fuel’s crack spread versus West Texas Intermediate crude fell 3 cents to $14.15 a barrel. The fuel’s premium over Brent rose 22 cents to $9.53.

Pump prices, averaged nationwide, rose 0.2 cent to $3.536 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 18.2 cents below a year earlier.

Ultra-low-sulfur diesel for September delivery rose 2.51 cents, or 0.8 percent, to $3.095 a gallon on trading volume that was 1.1 percent below the 100-day average. Prices are up 0.4 percent this week and have advanced 1.7 percent in August.

ULSD’s crack spread versus WTI slipped 33 cents to $23.74 a barrel. The premium over Brent narrowed 8 cents to $19.12.

To contact the reporters 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