Gasoline Dips to Near Two-Year Low as Refinery Maintenance Ends

Gasoline slid to the lowest level since December 2011 on speculation supply will increase as U.S. refiners return units to production after repairs.

Futures fell 0.7 percent and crack spreads narrowed. Over the past five years, U.S. refinery rates rose an average of 1.1 percentage points in November and December, according to the Energy Information Administration.

“The market is being weighed on by the return of refiners from maintenance and the expected increase in supply,” said Andy Lipow, president of Lipow Oil Associates in Houston.

Gasoline for December delivery fell 1.72 cents, or 0.4 percent, to $2.5282 a gallon on the New York Mercantile Exchange, the lowest settlement since Dec. 19, 2011. Trading volume on all contracts was 1.8 percent below the 100-day average at 2:49 p.m.

Refineries are restarting units after planned seasonal work and unscheduled repairs. Phillips 66 said on Nov. 1 that it completed maintenance at its 146,000-barrel-a-day Borger, Texas, refinery. Delta Air Lines Inc.’s Monroe Energy LLC subsidiary said that same day that it was operating the fluid catalytic cracker at its 185,000-barrel-a-day Trainer, Pennsylvania, plant after unplanned work.

Gasoline Output

Gasoline production in the week ended Oct. 25 was the highest since Aug. 16, when refiners were trying to meet higher summer demand. U.S. crude inventories jumped 7.9 percent in the six weeks ended Oct. 25, according to EIA data.

“The crude oil situation in the U.S. is the main bearish factor on the fundamental side,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “I expect to see a healthy build on the product side.”

The EIA is scheduled to report inventories on Nov. 6 for the seven days ended Nov. 1.

The motor fuel’s crack spread versus West Texas Intermediate crude narrowed 73 cents to $11.56 a barrel. The fuel’s spread versus Brent fell $1.04 to a 5-cent discount.

U.S. retail pump prices, averaged nationwide, fell 0.6 cent to $3.252 a gallon, the lowest level since Dec. 25, Heathrow, Florida-based AAA said today on its website. Prices are 22.3 cents below a year ago.

Ultra-low-sulfur diesel for December delivery fell 0.81 cent, or 0.3 percent, to $2.8741 a gallon, the lowest settlement since July 1. Trading volume was 6.2 percent above the 100-day average at 2:56 p.m.

ULSD’s premium over WTI declined 35 cents to $26.09 a barrel. The spread versus Brent narrowed 66 cents to $14.48.

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