Gasoline Gains as Federal Reserve Lowers Unemployment EstimateBarbara Powell
Gasoline advanced as the U.S. Federal Reserve lowered its estimate for the country’s unemployment rate, boosting optimism that fuel demand will increase. Crack spreads widened.
Futures gained 0.5 percent. The Fed’s estimate for this year centered at 7.2 percent to 7.3 percent, compared with a March estimate of 7.3 percent to 7.5 percent. For 2014, the central bank estimated 6.5 percent to 6.8 percent, down from 6.7 percent to 7 percent.
“It’s a good sign for refined products,” said Carl Larry, president of of Oil Outlooks & Opinions LLC in Houston. “Looking for unemployment to ease in 2013 and then to 6.5 percent in 2014 is a sign demand will increase.”
July-delivery gasoline rose 1.3 cents to settle at $2.8924 a gallon on the New York Mercantile Exchange. Trading volume was 25 percent below the 100-day average at 2:57 p.m.
Prices swung between $2.8815 and $2.903 a gallon after the announcement, touching the lower end of the range as the dollar increased as much as 0.8 percent against the euro, reducing the investment appeal of commodities.
Futures touched $2.8747 earlier after a report that U.S. refiners processed the most crude in six months, implying production of the motor fuel will increase.
The Energy Information Administration said refinery crude inputs climbed 1.9 percent to 15.5 million barrels a day, the most since Dec. 14. Supplies rose 183,000 barrels to 221.7 million, a nine-week high. Total inventories of crude and products are the highest since October 2010.
“At some point the market has to come to grips with the supply situation,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
July gasoline’s crack spread versus West Texas Intermediate widened 74 cents to $23.24 a barrel. Gasoline’s premium over August Brent increased 43 cents to $14.98.
Inventories in PADD 1, which includes New York Harbor, delivery point for the Nymex contract, slid 1.51 million barrels to 62.3 million. That’s still the highest level for this time of year since 2002. Imports fell 27 percent to 485,000 barrels a day, the least since the week ended March 15.
“Despite the draw, gasoline stocks in the all-important East Coast remain 8 million barrels higher than last year’s levels and some 5.8 million barrels higher relative to the five-year average,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Supplies in PADD 2, which includes Chicago, rose a fourth straight week to a seven-week high. Inventories of the motor fuel in PADD 3, or the Gulf Coast region, home to 45 percent of U.S. operable refining capacity, fell 10,000 barrels to 75.5 million.
Demand, measured as wholesale deliveries, rose 2.2 percent to 8.84 million barrels a day. Demand over the past four weeks was 0.4 percent lower than a year earlier.
Gasoline at the pump, averaged nationwide, fell 0.4 cent to $3.603 a gallon, Heathrow, Florida-based AAA said today on its website. Prices have fallen for seven straight days to the lowest level since May 15 and are 10.6 cents above a year earlier.
Distillate stockpiles, including diesel and heating oil, fell 489,000 barrels to 121.6 million. A survey by Bloomberg projected a build of 925,000 barrels. Demand fell 1.5 percent to 4.02 million barrels a day. Measured over four weeks, demand was 8.5 percent above a year earlier.
“Distillate demand was good,” Sen said. “it will continue to outperform gasoline with planting picking up.”
Ultra-low-sulfur diesel for July delivery rose 1.08 cents, or 0.4 percent, to settle at $2.9726 a gallon on trading volume that was 26 percent below the 100-day average.
The July ULSD contract’s crack spread versus WTI increased 66 cents to $26.61 a barrel. The premium over Brent gained 34 cents to $18.78.