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Gasoline Jumps to Two-Week High on Refinery Repairs

Gasoline surged to a two-month high on speculation repairs at the largest oil refinery in the U.S. and fires at plants in Europe will curtail supplies as demand picks up heading into the holiday season.

Motiva Enterprises LLC began work at its Port Arthur, Texas, plant, the country’s largest, on Nov. 19, according to Destin Singleton, a company spokeswoman based in Houston. Exxon Mobil Corp.’s Rotterdam refinery had a small fire today and a unit was shut at Total SA’s Antwerp plant after an explosion Nov. 19. Lower production and imports may further reduce stockpiles of gasoline, which fell to a one-year low last week.

“When you see a big refinery like that indicating some problems, you see values rise in futures and crack spreads,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois-based consulting company.

Gasoline for December delivery gained 8.08 cents, or 3 percent, to $2.7438 a gallon on the New York Mercantile Exchange the highest settlement since Sept. 13. Trading volume was 24 percent above the 100-day average at 2:33 p.m. Futures have declined 2.4 percent this year.

Demand for the motor fuel in the four weeks ended Nov. 15 was 3.8 percent above a year earlier, Energy Information Administration data show. Pump prices, which sank to $3.179 a gallon on Nov. 11, may rise above $3.25, Michael Green, a Washington-based spokesman for AAA, the nation’s largest motoring group, said Nov. 19. Prices climbed 0.8 cent to $3.22 yesterday, according to Heathrow, Florida-based AAA.

Fuel Demand

Fuel consumption, traditionally lower after summer, may increase during the approaching Thanksgiving and Christmas holidays when Americans use their cars and trucks to shop and visit families.

“We’re now going into the holiday shopping season and demand picks up, which should halt any further decline at this point,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.

Gasoline’s crack spread versus West Texas Intermediate oil, a rough measure of refining profitability, widened $1.49 to $18.76 a barrel. The fuel’s premium to European benchmark Brent oil gained $1.06 to $4.12.

A fluid catalytic cracker was shut late yesterday at Motiva’s Port Arthur plant, according to a report today from Genscape Inc., a Louisville, Kentucky-based energy-information provider. One unit at Motiva’s 250,000-barrel-a-day Norco, Louisiana, refinery remains shut for a turnaround that began in early October, Singleton said by phone.

Inventory Decline

Inventories of gasoline sank to 208.9 million barrels in the week ended Nov. 15, the lowest level since Nov. 23, 2012, EIA data show.

Supplies have dropped as maintenance was extended at Phillip 66’s 238,000-barrel Bayway site in New Jersey, the closest plant to the New York Harbor delivery point for Nymex futures. Bayway will take an extra two or three weeks to complete work begun in October, a person familiar with operations said on Nov. 8.

Futures also climbed along with crude as jobless claims dropped more than forecast and as talks continued over Iran’s nuclear program.

Applications for unemployment benefits fell by 21,000 to 323,000 in the week ended Nov. 16, the fewest since the week ended Sept. 29, the U.S. Labor Department said today. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 335,000.

Iran Talks

Iran’s Foreign Minister Mohammad Javad Zarif met with European Union foreign policy chief Catherine Ashton for about two hours, according to an EU statement. Ashton is negotiating on behalf of the five permanent members of the United Nations Security Council plus Germany and will convene another round of discussions with Zarif later today.

Exxon said there were no injuries and no impact to operations from an oil-gas fire that broke out at the Rotterdam refinery.

“These items are affecting overall market direction,” said Tom Finlon, director of Energy Analytics Group Ltd. in Jupiter, Florida. Lower inventories, an “unplanned outage at the largest refinery in the U.S. and gasoline demand still slightly higher than last year’s levels have driven relative values of gasoline higher,” he said.

Ultra-low-sulfur diesel rose to a four-week high, adding 5.22 cents, or 1.8 percent, to $3.0067 a gallon. Volume was 54 percent above the average.

ULSD’s premium over WTI widened 63 cents to $30.80 a barrel. The crack spread versus Brent increased 20 cents to $16.16.

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