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Gasoline Gains as East Coast Supplies Slip to Eight-Month Low

Sept. 25 (Bloomberg) -- Gasoline gained as inventories on the East Coast slipped to an eight-month low and refineries shut units for seasonal maintenance and unplanned repairs.

Futures rose as the Energy Information Administration reported that gasoline stockpiles in PADD 1, which includes New York Harbor, the delivery point for the futures contract, fell 1.67 million barrels to 54.4 million in the week ended Sept. 20. Gasoline is down 11 percent this month as driving season ended and refiners switch to making winter-grade fuel, which uses cheaper blending components.

“The market is looking at the PADD 1 draw,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “That always provides a boost. And gasoline has fallen so much, it probably has more value than any of the others.”

Gasoline for October delivery rose 1.37 cents, or 0.5 percent, to settle at $2.6729 a gallon on the New York Mercantile Exchange on trading volume that was 1.1 percent above the 100-day average at 4:18 p.m. Prices are down 4.9 percent this year and 2.9 percent in the third quarter.

Prices touched $2.7025 when the report was released at 10:30 a.m. today in Washington.

Refinery utilization fell 2.2 percentage points to 90.3 percent. The rate is seasonally the highest since 2004.

“It’s the time of year when we look for refinery utilization to be in the low 80s, not the low 90s,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The market has sold off hard and technically overdone to the downside so it’s not surprising to see a little bit of firming.”

Nationwide Inventories

Total gasoline inventories rose 217,000 barrels to 216.2 million barrels, seasonally the highest level since 2010. A survey by Bloomberg projected a drop of 750,000 barrels. Gasoline output fell 2.8 percent to 9.03 million barrels a day, the lowest since the week ended May 24.

The overall “inventory numbers were bearish,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We’re 10.4 percent above a year earlier. We’re up despite that data.”

The motor fuel’s crack spread versus West Texas Intermediate crude widened 89 cents to $8.93 a barrel, down from $13.73 on Aug. 30. The fuel’s premium over Brent rose 74 cents to $3.27.

Pump prices, averaged nationwide, fell 1.4 cents to $3.447 a gallon, 36.3 cents below a year ago, Heathrow, Florida-based AAA said today on its website.

Inventories of distillates, including diesel and heating oil, slipped 234,000 barrels to 130.9 million, less than the 925,000-barrel draw projected in the survey.

Ultra-low-sulfur diesel for October delivery rose 1.21 cents, or 0.4 percent, to $2.9731 a gallon on trading volume was near the 100-day average. Futures have dropped 2.4 percent this year and are up 3.2 percent in the third quarter.

ULSD’s crack spread versus WTI widened 93 cents to $22.13 a barrel. The premium over Brent increased 78 cents to $16.47.

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

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

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