Sept. 3 (Bloomberg) -- Gasoline slid to a three-week low as yesterday’s U.S. Labor Day holiday marked the end of the nation’s summer driving season and a switch to winter-grade fuel, which is less-expensive to produce.
Futures dropped as consumption typically declines after Labor Day when summer vacations end and students return to school. U.S. gasoline demand dipped to a five-week low in the seven days ended Aug. 23 and in June was the lowest for that month since 2001, government data show. Environmental regulations will ease this month, allowing refiners to choose from more components when blending fuel.
“We’re right in the heart of the shoulder season and gasoline seasonally would be a little bearish,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Gasoline for October delivery fell 2.55 cents, or 0.9 percent, to $2.8646 a gallon on the New York Mercantile Exchange, the lowest settlement since Aug. 8. Trading volume was 3.4 percent below the 100-day average at 2:44 p.m.
Supplies of reformulated gasoline blendstocks, 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. Total U.S. inventories were 5 percent above the five-year average for that week, according to an EIA analysis.
“We made it through the Labor Day weekend and inventories remain 8 percent higher than a year earlier and that will keep gasoline under pressure,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The motor fuel’s crack spread versus West Texas Intermediate crude narrowed $1.96 to $11.77 a barrel. The fuel’s premium over Brent slipped $2.74 to $4.63 a barrel, the smallest since Jan. 16.
Pump prices, averaged nationwide, fell for the first time since Aug. 20, dropping 0.3 cent to $3.591 a gallon, Heathrow, Florida-based AAA said today on its website. Retail prices are 23.6 cents below a year earlier, AAA data show.
Prices at the pump have fallen four of the past five years in September, dropping an average 8 cents a gallon “due to lower demand and the switchover to less expensive winter-blend gasoline,” Michael Green, a spokesman for AAA in Washington, said in a e-mail today.
Gasoline earlier erased losses as heating oil, West Texas Intermediate crude and Brent crude strengthened after President Barack Obama won support from House Speaker John Boehner and House Majority Leader Eric Cantor to use military force against Syria. The Obama administration contends it has proof that Syrian President Bashar Al-Assad authorized the Aug. 21 chemical weapons attack against his own people.
“It looks like there’s going to be permission granted for a strike,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Diesel “is following Brent and Brent is dragging up WTI. But we might be approaching areas of being overbought unless we have a significant supply disruption,” he said.
Ultra-low-sulfur diesel for October delivery rose 1.17 cents, or 0.4 percent, to $3.1483 a gallon on trading volume that was 0.5 percent below the 100-day average. Futures gained 3.2 percent in August, the third consecutive advance.
ULSD’s crack spread versus WTI narrowed 40 cents to $23.69 a barrel while the premium over Brent fell $1.18 to $16.55.
--Editors: David Marino, Charlotte Porter