Gasoline Slides Most in a Month on Speculation Demand to Drop

Gasoline slid the most in a month on speculation demand will decline as the summer driving season ends after the Sept. 2 U.S. Labor Day holiday and as the school year begins.

Futures dropped 1.8 percent, wiping out last week’s 1.3 percent gain, which followed a series of unplanned refinery outages from Canada to Texas. Prices also fell on concern that the Federal Reserve will taper monetary stimulus in September. Demand for gasoline and distillate fuels typically tails off in the “shoulder” season after the end of summer peak driving season and before winter, when heating demand picks up.

“We’re going into the shoulder season and there’s the possibility of tapering in September,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The expectations of a shortage of supply are diminishing.”

Gasoline for September delivery fell 5.55 cents to settle at $2.9517 a gallon the New York Mercantile Exchange. Trading volume was 26 percent below the 100-day average at 4:11 p.m.

Gasoline, after jumping 11 percent in July, has declined 3 percent this month. The September contract expires Aug. 30. September gasoline’s premium to the October contract narrowed 1.93 cents to 11.72 cents a gallon.

“There’s volatility as we get to the end of the driving season and near the expiration for the summer grade gasoline,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “Stocks are still the second-highest level since 1989.”

Crack Spreads

The motor fuel’s crack spread versus West Texas Intermediate crude narrowed a third straight day, dropping $1.02 to $13.13 a barrel. The fuel’s premium over Brent declined $1.21 to $8.32.

Futures widened losses as a plant that supplies fuel to the U.S. Northeast delayed a turnaround planned for October, increasing supply in the region. Irving Oil Corp.’s Saint John refinery in New Brunswick put off work on a fluid catalytic cracker and related units to February, said two people familiar with the project, who asked not to be identified because the information isn’t public.

Pump prices, averaged nationwide, were unchanged a second day at $3.541 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 20.7 cents below a year earlier.

Ultra-low-sulfur diesel for September delivery slipped 1.6 cents, or 0.5 percent, to $3.079 a gallon on trading volume that was 31 percent below the 100-day average. Prices are up 1.2 percent this month.

ULSD’s crack spread versus WTI dropped 15 cents to $23.59 a barrel. The premium over Brent fell 34 cents to $18.78.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE