Gasoline Rises After Government Increases Demand Outlook

Gasoline futures gained after the Energy Information Administration increased its forecast for consumption of the motor fuel.

Futures rose 0.3 percent. Gasoline demand will average 8.77 million barrels a day this year, the EIA said in its monthly Short-Term Energy Outlook. That’s up 0.5 percent from last month’s outlook. Consumption in 2014 may be 8.74 million barrels a day, up from the EIA’s November’s estimate of 8.69 million.

“They increased U.S. demand numbers, which really seemed to give us quite a boost in the market,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “For a report that doesn’t normally move us, it gave support to a market that was lacking direction.”

Gasoline futures for January delivery rose 0.8 cent to settle at $2.6829 a gallon on the New York Mercantile Exchange. Volume was 4 percent below the 100-day average at 2:52 p.m.

Gasoline’s crack spread versus West Texas Intermediate narrowed 83 cents to $14.17 a barrel, while the premium to European benchmark Brent widened 35 cents to $3.30.

U.S. gasoline prices at the pump, averaged nationwide, fell 0.4 cent to $3.259 a gallon, Heathrow, Florida-based AAA said today. Prices are 6.9 cents below a year ago.

Vehicle Travel

The Federal Highway Administration’s monthly report of motor vehicle travel indicates year-over-year growth of 1.5 percent in the third quarter, compared with an increase of 0.4 percent in the first half of the year, the EIA said on its website.

Gasoline pump prices in the fourth quarter will average $3.27 a gallon, the EIA said, up from the previous forecast of $3.24, and in 2014 will average $3.43, 4 cents above last month’s outlook. Prices have been supported by planned and unplanned refinery maintenance and stronger export demand, the EIA said.

Distillate consumption, including diesel and heating oil, will be 3.83 million barrels a day this year, unchanged from November’s outlook. Demand will be 3.87 million in 2014, down from 3.91 million in last month’s forecast.

On-road diesel fuel will average $3.92 a gallon this year, higher than last month’s forecast of $3.91. Next year, prices may drop to $3.77 a gallon, compared with last month’s estimate of $3.73.

Ultra-low-sulfur diesel for January delivery rose 0.3 cent to $3.0173 a gallon on the Nymex on volume that was 6.9 percent below the 100-day average.

ULSD’s premium over WTI fell $1.04 to $28.22 a barrel. The crack spread versus Brent grew 14 cents to $17.35.

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