Gasoline Gains as Maintenance Delays Amid Upsets Reduce Supply

Gasoline advanced a second straight day on speculation that longer-than-expected seasonal U.S. refinery repairs and plant upsets will lower supply.

Prices rose 1.7 percent as maintenance at Phillip 66’s 238,000-barrel-a-day Bayway refinery in New Jersey is weeks behind schedule, a person familiar with operations said Nov. 8. Bayway is the closest plant to New York Harbor, the delivery point for gasoline futures contracts. Citgo Petroleum Corp.’s Lemont, Illinois, plant is at reduced rates after an Oct. 23 fire in the crude unit.

“Gasoline is being supported by issues like the delay in the turnaround at Bayway,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for December delivery rose 4.31 cents to settle at $2.5965 a gallon on the New York Mercantile Exchange. It was the first two-day advance since Oct. 8. Trading volume was 0.6 percent above than the 100-day average at 3:23 p.m.

Stockpiles declined 3.76 million barrels in the week ended Nov. 1 to 210 million, the lowest in almost a year, Energy Information Administration data show. The EIA, the Energy Department’s statistical arm, will probably report on Nov. 13 that supplies dropped an additional 500,000 barrels last week, according to the median estimate of nine analysts surveyed by Bloomberg.

Refinery capacity probably increased 0.8 percentage point, based on the survey. Distillate inventories, including heating oil and diesel, fell 900,000 barrels.

Returning Capacity

“There’s a lot of capacity set to come back after maintenance but there’s concern on how smoothly all the capacity comes back online,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Futures extended gains as Brent crude rose 1.2 percent on the ICE Futures Europe exchange. Iran and world powers failed to reach an agreement to limit the country’s nuclear program during talks in Geneva. Iran’s oil output is down 16 percent since the U.S. and the European Union tightened sanctions in July 2012 to curb its nuclear program.

Another round of negotiations is set to resume on Nov. 20.

“Even if progress is made at the Iranian negotiations, the market is unlikely to see additional quantities of Iranian crude return anytime soon,” said Lipow.

Gasoline’s crack spread versus WTI widened $1.27 to $13.91 a barrel. The fuel’s premium versus Brent increased 53 cents to $2.65 a barrel.

U.S. pump prices, averaged nationwide, fell 0.6 cent to $3.186 a gallon, the lowest level since Feb. 21, 2011, Heathrow, Florida-based AAA said today on its website. Prices are 25.3 cents below a year ago.

Ultra-low-sulfur diesel for December delivery rose 1.94 cents, or 0.7 percent, to $2.8913 a gallon on trading volume that was 15 percent below the 100-day average.

ULSD’s premium over WTI rose 27 cents to $26.29 a barrel. The spread versus Brent narrowed 47 cents to $15.03.

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