Gasoline Crack Spread Narrows as Supplies Climb; Brent Weaker

Gasoline’s spread to West Texas Intermediate oil narrowed as U.S. East Coast supplies of the motor fuel increased and the gap between WTI and Brent crude shrank. April gasoline’s premium over later months shrank.

The April crack spread versus WTI crude on Nymex, slipped $1.19 to $39.62 a barrel, the smallest gap in a week. Brent’s premium over WTI slipped $1.04 to $19.59 a barrel. The Energy Information Administration said yesterday that East Coast gasoline stockpiles increased last week to the highest level in almost a year as imports jumped.

“The Brent-WTI spread has narrowed quite a bit,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “Supplies have improved and the summer season is still a few months away.”

April-delivery gasoline fell 0.14 cent to settle at $3.1233 a gallon on the New York Mercantile Exchange.

Gasoline’s premium over Brent oil on the ICE Futures Europe exchange narrowed 15 cents to $20.03 a barrel. The fuel’s backwardation declined, indicating less concern that demand will outpace supply.

“What’s keeping the market anchored is we are well supplied in the U.S.,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

Fuel Supplies

Gasoline supplies in PADD 1, or the East Coast, expanded 651,000 barrels to 60.5 million, the highest level in almost a year, as imports climbed 21 percent to 599,000 barrels a day. East Coast inventories of reformulated gasoline, or RBOB, rose 1.43 million barrels to 20.3 million, the highest level since March 2011.

Brent weakened after a pipeline system used to transport North Sea oil resumed operation following a five-day halt and Total SA got permission from the U.K. government to restart a North Sea platform that was shut March 25, 2012, after a natural gas leak.

“The combination of resumption of flows on the Brent pipeline and the restart of the Elgin-Franklin gas fields is putting pressure on Brent,” Sen said.

Heating oil for March delivery rose 0.39 cent to settle at $2.9795 a gallon on trading volume that was 9.2 percent above the 100-day average for the time of day.

Gasoline at the pump, averaged nationwide, fell 0.8 cent to $3.719 a gallon, AAA said today on its website. It was the eighth consecutive drop.

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