Gasoline Settles Little Changed After Wild Swings on RIN CostsBarbara Powell
Gasoline futures settled little changed in New York after swinging in a nine-cent range amid volatile biofuel credit prices.
Futures traded between $3.1026 and $3.19 a gallon as the cost of Renewable Identification Numbers for 2013 vintage, or RINS, that refiners must buy in lieu of blending ethanol into gasoline, were offered at 75 cents a gallon, according to Starfuels Inc., down from $1.01 yesterday.
“This manic behavior going on in both markets suggests the two are related,” said Mark Anderle, a trader at Truman Arnold Cos. in Dallas. “This RIN thing has thrown a wrench into people’s ideas of how the market should behave.”
Gasoline for April delivery slipped 0.22 cent to settle at $3.1502 a gallon on the New York Mercantile Exchange. Trading volume was 84 percent above the 100-day average for the time of day. The contract is for reformulated gasoline to be blended with ethanol, or RBOB.
Prices touched $3.1856 at 9:05 a.m., fell as low as $3.1026 at 10:50 a.m., jumped to $3.19 at 12:03 p.m. and then retreated again.
’’Support held,’’ Anderle said. “The trend line is roughly $3.10 and it held up. We can’t get any conviction around a selloff.”
Gasoline volatility has increased even as crude oil has moved little. The 30-day average historical volatility for crude was 14.7 percent today compared with 33.7 percent for RBOB. That’s up from 19.9 percent on Feb. 25, when crude volatility was 15.5 percent.
“Volatility is nonexistent for WTI,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “It’s spun over to RBOB.”
The April crack spread versus WTI narrowed 57 cents to $39.77 a barrel, after dropping as low as $37.30. The spread against Brent oil on ICE Futures Europe Exchange widened 48 cents to $22.66.
The Energy Information Administration will probably report tomorrow that U.S. gasoline stockpiles fell 1.2 million barrels last week, according to the median of 11 analyst estimates compiled by Bloomberg.
Refinery utilization was unchanged at 82.2 percent, according to the survey. The rate has fallen as refineries take units down for seasonal maintenance and a series of unplanned shutdowns since February.
“How quickly is refinery production going to come back online and by how much?” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “That dictates what imminent product supply will look like. That’s the question.”
Heating oil for April delivery sank 2.07 cents, or 0.7 percent, to $2.9484 a gallon on volume that was 36 percent above the 100-day average for the time of day.
Distillate inventories, including heating oil and diesel, may have dropped 2 million barrels last week according to the survey.
Gasoline at the pump, averaged nationwide, rose 0.7 cent to $3.703 a gallon, AAA said today on its website. It was the first increase since Feb. 26. Prices are 9.8 cents below a year ago.