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Gasoline Futures Jump to Three-Month High on Refinery Shutdowns

Gasoline has climbed 5.5 percent this month and is up 0.6 percent this year. Photographer: Craig Warga/Bloomberg
Gasoline has climbed 5.5 percent this month and is up 0.6 percent this year. Photographer: Craig Warga/Bloomberg

Dec. 26 (Bloomberg) -- Gasoline futures jumped to the highest level in more than three months as supplies in the Northeast may fall on refinery shutdowns and greater demand during the holiday season.

Delta Air Lines Inc.’s Pennsylvania refinery, which serves the New York Harbor area, delivery point for futures contracts, plans to shut units next week for work. AAA, the biggest U.S. motoring club, said the number of automobile travelers from Dec. 21 to Jan. 1 will increase to a record 85.8 million.

“Delta is a contributing factor and demand has been fairly good,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.

Gasoline for January delivery rose 0.58 cent to $2.82 a gallon on the New York Mercantile Exchange, the highest settlement since Sept. 6. Trading volume was 43 percent below the 100-day average as of 3:25 p.m. The futures have climbed 5.1 percent this month and 0.3 percent this year.

Delta plans to shut a crude unit and work on an isocracker at the 185,000-barrel-a-day Trainer plant, Adam Gattuso, a spokesman for the refinery, said Dec. 23. Gasoline stockpiles along the East Coast fell 1.4 percent in the week ended Dec. 13, according to Energy Information Administration data.

The “Delta Trainer refinery is going to start a turnaround early, and that is supportive for gasoline,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

EIA Report

U.S. gasoline demand climbed 8 percent in the week ended Dec. 13 and total petroleum demand jumped 13 percent to the highest level since 2008, EIA data show. U.S. gasoline imports slipped 15 percent. The agency is scheduled to report on last week’s inventories at 11 a.m. tomorrow in Washington.

Gasoline also gained on speculation that imports fell last week after a labor strike starting Dec. 13 disrupted output from Total SA’s five refineries in France.

“The French strike did have an impact in that imports are going to be lower,” Lebow said.

The motor fuel’s crack spread versus West Texas Intermediate, a rough measure of refining profitability, narrowed 16 cents to $18.78 a barrel. Gasoline’s premium to London-traded Brent crude widened 5 cents to $6.39.

The average U.S. pump price rose 0.4 cent to $3.268 a gallon, the seventh consecutive increase and highest price since Dec. 1, according to Heathrow, Florida-based AAA.

Ultra low sulfur diesel for January delivery gained 1.65 cents, or 0.5 percent, to $3.0948 a gallon on trading volume that was 39 percent below the 100-day average. Futures have climbed 1.5 percent this month and are up 1.6 percent this year.

ULSD’s crack spread versus WTI widened 11 cents to $29.76 a barrel. The premium over Brent gained 30 cents to $17.37.

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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