Gasoline Rises After Larger-Than-Expected Inventory Drop

Gasoline futures rose after the Energy Information Administration reported a larger-than-expected decline in inventories last week.

Futures gained 0.9 percent. Gasoline supplies fell 5.19 million barrels to 210.4 million as of April 4, more than the 1 million-barrel drop projected in a Bloomberg survey. Inventories are the lowest since Nov. 15, down 9.8 percent in seven weeks of contractions, as refiners performed seasonal maintenance and sold off stocks of winter-grade gasoline.

“That’s a big gasoline draw,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “I’m just surprised at the magnitude of the draw.”

May-delivery gasoline rose 2.83 cents to settle at $3.0084 a gallon on the New York Mercantile Exchange after touching $3.014, the highest intraday price since March 4. Volume was more than double the 100-day average at 3:34 p.m.

On the Gulf Coast, inventories slid 2.27 million barrels to 74.5 million, the biggest decline since February 2013. The drop followed a four-day closing of the Houston Ship Channel the prior week after a fuel oil spill, which kept refiners from moving finished gasoline by waterway.

“It’s still very normal for stocks to be drawn down now and the fundamentals are acting along according to script,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.

Crack Spreads

The motor fuel’s crack spread versus West Texas Intermediate crude, based on settlement prices, rose 15 cents to $22.75 a barrel. Gasoline’s premium to European benchmark Brent gained 88 cents to $18.37 a barrel.

The average U.S. pump price rose 1.5 cents to $3.601, the highest since Aug. 5, according to data from Heathrow, Florida-based AAA.

Ultra low sulfur diesel for May delivery gained 1.96 cents, or 0.7 percent, to $2.954 a gallon on volume that was 13 percent below the 100-day average.

Inventories of distillates, including diesel and heating oil, rose 239,000 barrels to 113.2 million. The survey projected that supplies fell 250,000 barrels.

Diesel’s crack spread versus WTI narrowed 22 cents to $20.47. The premium to Brent was up 51 cents to $16.09.

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