Aug. 19 (Bloomberg) -- Gasoline declined to a one-week low as the threat of tropical storms in the Atlantic Ocean and Gulf of Mexico faded while the U.S. approaches the end of summer driving season.
Futures sank 1.2 percent. The National Hurricane Center is not tracking any tropical cyclones after Tropical Storm Erin and a low-pressure system in the Gulf of Mexico dissipated over the weekend. Gasoline supplies are above the five-year seasonal average as refiners prepare to switch away from producing summer-grade fuel, which is more expensive to make.
“Both storms have now dissipated, and that has definitely taken the edge off the gasoline market,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “We only need summer-grade gasoline through Sept. 15. No one wants to get stuck with high-priced inventory.”
Gasoline for September delivery slipped 3.42 cents to settle at $2.9333 a gallon on the New York Mercantile Exchange on trading volume that was 10 percent below the 100-day average at 3:29 p.m.
Gasoline inventories stood at 222.4 million barrels on Aug. 9, 5.7 percent above the five-year average for the time of year, according to information from the U.S. Energy Information Administration. The Environmental Protection Agency’s requirements that fuel stations sell gasoline with lower vapor pressure, which is more expensive to produce, are relaxed after Sept. 15.
The motor fuel’s crack spread versus West Texas Intermediate crude narrowed $1.08 to $16.10 a barrel. October gasoline’s premium over Brent fell 76 cents to $8.38 a barrel.
September gasoline’s premium over October slipped a third consecutive day, narrowing 0.41 cent to 11.7 cents a gallon, the smallest gap since June 27.
Pump prices, averaged nationwide, fell 0.2 cent to $3.538 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 18.2 cents below a year ago.
Ultra-low-sulfur diesel for September delivery fell 1.21 cents, or 0.4 percent, to $3.071 a gallon on the Nymex on trading volume that was 5.6 percent below the 100-day average. It was the first drop in futures since Aug. 8.
Diesel lost less than gasoline as the U.S.’s largest refinery, Motiva Enterprises LLC’s plant in Port Arthur, Texas, shut units and operated others at reduced rates.
Motiva’s 600,000-barrel-a-day site shut a unit on Aug. 17 following an operational issue and is shutting more units and running others at reduced rates, Destin Singleton, a Houston- based spokeswoman, said by e-mail. The refinery idled its largest crude unit yesterday, according to a report from Genscape Inc., a Louisville, Kentucky-based energy information provider.
“Motiva’s generally geared toward distillate production,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “This coming as refinery maintenance is going to start up in October and even September is putting pressure on the distillate market.”
ULSD’s crack spread versus West Texas Intermediate crude fell 15 cents to $21.88 a barrel. The October contract’s premium over Brent increased 3 cents to $19.43 a barrel.
--With assistance from Barbara Powell in Dallas. Editors: David Marino, Richard Stubbe