Gasoline Rises Third Day as U.S. Supplies and Imports Decline

Gasoline futures rose a third straight day as the Energy Information Administration reported that inventories fell and imports declined last week. Crack spreads narrowed.

Futures advanced as gasoline supplies dropped 366,000 barrels to 218.8 million in the week ended May 31. Inventories in PADD 1, which includes New York Harbor, delivery point for the Nymex contract, slid 1.83 million barrels to a six-week low. Imports fell 17 percent.

“PADD 1 is definitely supportive of gasoline and there are lower imports,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.

Gasoline for July delivery rose 0.48 cent to settle at $2.823 a gallon on the New York Mercantile Exchange. Trading volume for all contracts was 26 percent below the 100-day average for the time of day.

July gasoline’s crack spread versus West Texas Intermediate narrowed 23 cents to $24.83 a barrel. Gasoline’s premium over Brent gained 41 cents to $15.53.

Inventories of the motor fuel in PADD 3, or the Gulf Coast region, home to 45 percent of U.S. operable refining capacity, rose 1 million barrels to 77 million, the highest level since the week ended Feb. 15. Refinery inputs and production of gasoline jumped to the highest levels this year.

“Going forward you will see short bursts of price support,” Sen said. “But there are troubling signs for the future. Runs are very high in the U.S. and look at PADD 3 gasoline supplies.”

Gasoline Demand

Demand, measured as wholesale deliveries, fell 134,000 barrels to 8.82 million barrels a day. Demand over the past four weeks was 0.8 percent lower than a year earlier. The EIA estimated that gasoline exports were 308,000 barrels a day, down from 411,000 a year earlier.

“Demand is showing some signs of life,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “For the market to sustain the upside, it’s going to have to be demand-led. Runs and gasoline production are going to be high. You will need good export demand to keep inventory levels from getting sloppy.”

Distillate stockpiles, including diesel and heating oil, rose 2.61 million barrels to 123.3 million, the highest level since Feb. 22. Demand fell 1.7 percent to an average 3.75 million barrels a day. Measured over four weeks, demand was 6 percent above a year earlier.

Ultra-low-sulfur diesel for July delivery fell 0.95 cent, or 0.3 percent, to $2.8554 a gallon on trading volume that was 7.9 percent below the 100-day average.

The July ULSD contract’s crack spread versus West Texas Intermediate crude oil narrowed 83 cents to $26.19 a barrel, while the premium over Brent slipped 20 cents to $16.89.

Gasoline at the pump, averaged nationwide, fell 0.2 cent to $3.617 a gallon, Heathrow, Florida-based AAA, the nation’s largest motoring organization, said today on its website. Prices are 4.7 cents above a year earlier.

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