(See EXTRA for more news on the Syrian conflict.)
Aug. 29 (Bloomberg) -- Gasoline slipped as crude retreated on fading prospects for an imminent strike against Syria by the U.S. and its allies and as the end of the U.S. summer driving season looms.
Futures slid 0.9 percent. The U.K. and France said they favor waiting for results from a United Nations investigation into alleged use of chemical weapons by Syrian President Bashar al-Assad against his own people. The U.S. won’t act without allies, Defense Secretary Chuck Hagel said today. U.S. gasoline demand dipped to a five-week low in the seven days ended Aug. 23, government data show.
“The market got ahead of itself as did the politicians, and there seems to be a little bit of a pullback from the brink,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.
Gasoline for September delivery fell 2.81 cents to $3.0664 a gallon on the New York Mercantile Exchange. Trading volume was 25 percent below the 100-day average at 2:48 p.m. Prices have gained 0.7 percent in August.
West Texas Intermediate crude for October delivery fell $1.30 to $108.80 a barrel on the Nymex. Brent crude for October delivery on the London ICE Futures Exchange declined $1.45 to $115.16.
September gasoline and diesel futures expire at the close of floor trading tomorrow. The more-actively traded October contract slipped 3.1 cents to $2.9306 a gallon.
Gasoline settled at the highest level since July 19 yesterday as Brent crude reached a six-month high on concern that a strike on Syria would ignite regional tensions and disrupt oil supplies. The UN’s investigators will continue their on-site probe tomorrow, leave Syria by early Aug. 31 “and report to me as soon as they come out,” Secretary-General Ban Ki-moon told reporters in Vienna today.
“The market is giving back some of its gains as an attack on Syria doesn’t appear to be imminent,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Supplies of reformulated gasoline, or RBOB, along the U.S. East Coast, where Nymex futures are delivered, rose 687,000 barrels last week to 17 million, 8 percent higher than a year ago. Demand for the motor fuel in the U.S. typically declines after the Labor Day holiday, which falls on Sept. 2 this year, as the weather cools and students head back to school.
“Gasoline inventories are higher than last year. As for demand, once this weekend is over, that’s about it,” Armstrong said.
Inventories may rise as refineries restart units after unplanned repairs. Irving Oil Corp.’s Saint John, New Brunswick, plant, which ships fuel to the U.S. Northeast, has restarted a fluid catalytic cracker following an unplanned shutdown Aug. 23, Genscape Inc. reported yesterday.
“The complex as a whole is taking a breather, a spate of unplanned outages are easing and the seasonal peak in demand is pretty much past,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
The motor fuel’s crack spread versus West Texas Intermediate crude was unchanged at $14.29 a barrel. The fuel’s premium over Brent widened 15 cents to $7.93.
Pump prices, averaged nationwide, rose 1.8 cents to $3.564 a gallon, Heathrow, Florida-based AAA said today on its website. That’s the biggest increase since July 16.
The possibility of a strike against Syria has “spooked U.S. markets and likely will result in higher pump prices in the days ahead,” said Michael Green, a spokesman for AAA in Washington.
Citigroup, in an e-mailed report today, said oil prices may “come off steeply” on the low likelihood of Syria, Iran or Russia retaliating against a strike on Syria. The U.S. and the International Energy Agency won’t release oil from reserves without Brent persistently above $120 a barrel and U.S. gasoline prices rising quickly, the analysts said.
The internaional crude market is adequately supplied and doesn’t require the relase of emergency stockpiles, the IEA said. The agency is monitoring the market and “stands ready” to respond if there’s a major supply disruption, the group said.
Retail prices are 24 cents below a year earlier and have fallen 10.8 cents from $3.672 on July 18, AAA data show.
Ultra-low-sulfur diesel for September delivery fell 2.34 cent to $3.1849 a gallon, after reaching a six-month high yesterday. Trading volume was 10 percent below the 100-day average. Futures have risen 4.7 percent this month. The October contract sank 2.3 cents to $3.1883.
ULSD’s crack spread versus WTI widened 33 cents to $25.11 a barrel. The premium over Brent climbed 48 cents to $18.75.
--With assistance from Ben Holland in Istanbul and James G. Neuger in Brussels. Editors: David Marino, Richard Stubbe