Gasoline Gains on Speculation Outages Will Reduce Fuel Supply

Gasoline rose on speculation that unplanned refinery shutdowns and slowdowns will reduce supply as the nation nears the Sept. 2 Labor Day holiday.

Futures climbed 0.9 percent. Motiva Enterprises LLC was forced to shut or slow crude units and other equipment at the 255,000-barrel-a-day Convent, Louisiana, plant and the 600,000-barrel-a-day Port Arthur, Texas, site, which is the largest in the U.S. Inventories fell 4.03 million barrels last week, according to the Energy Information Administration.

“Gasoline remains supported by higher-than-expected inventory draws and the numerous refinery problems at Motiva Port Arthur and Convent, which will impact gasoline supplies as we go into the Labor Day weekend,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for September delivery rose 2.71 cents to settle at $2.9648 on the New York Mercantile Exchange on trading volume that was 32 percent below the 100-day average at 2:57 p.m.

Motiva Port Arthur is operating at less than half capacity after the shutdown of a fire-damaged hydrocracker forced the idling of the plant’s biggest crude unit. The 325,000-barrel-a-day crude unit may remain offline because vessels able to transport its output of vacuum gasoil that had been going to the hydrocracker are in tight supply, a person familiar with operations said, declining to be identified because the information isn’t public.

Gasoline Discount

Gasoline’s discount to ultra-low-sulfur diesel narrowed 3.4 cents to 10.51 cents a gallon, the smallest gap in a week.

“There’s limited time remaining to gasoline season,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “But you’re liable to see a further seasonal decline in stocks over the next three or four weeks and we do have some refinery difficulties being reported. There’s some sense that the amount of gasoline’s discount makes it a value.”

Motiva’s refinery in Convent may have to keep a crude unit shut for a month after an Aug. 19 fire, a person familiar with operations said yesterday, who asked not to be named because the information is not public.

The motor fuel’s crack spread versus West Texas Intermediate crude narrowed 34 cents to $14.18 a barrel. The fuel’s premium over Brent rose 75 cents to $9.31.

Pump prices, averaged nationwide, rose 0.1 cent to $3.534 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 18.2 cents below a year earlier.

Ultra-low-sulfur diesel for September delivery fell 0.69 cent to settle at $3.0699 a gallon on trading volume that was 12 percent below the 100-day average.

ULSD’s crack spread versus WTI fell $1.51 to $24.07 a barrel. The premium over Brent dropped 42 cents to $19.20.

Before it's here, it's on the Bloomberg Terminal.