Gasoline Crack Spread Narrows as East Coast Supplies Increase

Gasoline’s crack spread to the U.S. benchmark crude narrowed as the Energy Department reported East Coast supplies grew to a 13-month high, tempering gains compared to oil.

The fuel’s premium over June West Texas Intermediate shrank 77 cents to $24.15 a barrel, while the spread versus Brent widened 6 cents to $13.85. Gasoline supplies in PADD 1, which includes the New York Harbor delivery point for futures contracts, increased 570,000 barrels to 60.6 million on April 19, the highest level since March 9, 2012.

“It’s all because PADD 1 built supplies,” said Andrew Lebow, senior vice-president at Jefferies Bache LLC in New York. “That probably has taken some of the bullishness out of it.”

Gasoline for May delivery rose 2.84 cents, or 1 percent, to settle at $2.7474 a gallon on the New York Mercantile Exchange on volume that was 38 percent above the 100-day average.

WTI for June delivery gained rose $2.25, or 2.5 percent, to $91.43 a barrel on the Nymex. Brent rose $1.42, or 1.4 percent, to end the session at $101.73 a barrel on the London-based ICE Futures Europe exchange.

Inventories of gasoline nationwide plummeted 3.93 million barrels last week as the amount of crude processed in refineries fell by 586,000 barrels a day, according to the Energy Information Administration. A power failure in Port Arthur, Texas, on April 14 disrupted operations at three plants with more than 1 million barrels a day of capacity.

East Coast

Inventories declined in every region except for PADD 1, or the East Coast.

“People make and take delivery in New York Harbor, which is PADD 1,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “When there’s draws there or builds there, it becomes the marker for price sensitivity.”

May futures slipped 0.67 cent to a 0.44-cent discount to June contracts. The June-July spread also weakened, narrowing 0.47 cent to a 1.08-cent premium.

Implied gasoline demand rose 303,000 barrels to 9.23 million barrels a day, the highest level since Nov. 16.

“We have the whole driving season in front of us,” said Gene McGillian, a trader and broker for Tradition Energy in Stamford, Connecticut. “We’re seeing the market stabilizing and prices start to firm.”

Distillate Stockpiles

Distillate fuel stockpiles nationwide increased by 97,000 barrels, less than the 500,000 barrel increase that was the medium estimate of 11 analysts surveyed by Bloomberg.

Ultra-low-sulfur diesel for May delivery rose 2.96 cents, or 1.1 percent, to $2.8413 a gallon on the Nymex. Trading volume was 36 percent below the 100-day average.

ULSD’s crack spread versus June West Texas Intermediate crude lost $1 to $27.33 a barrel. The spread versus Brent increased 23 cents to $17.03.

Gasoline at the pump, averaged nationwide, increased 0.1 cent to $3.515 a gallon, AAA said today on its website.