(See EXTRA for more on the Syria crisis.)
Sept. 4 (Bloomberg) -- Ultra-low sulfur diesel fell along with crude on speculation a U.S. strike against Syria isn’t imminent and would be limited in scope.
ULSD sank 0.4 percent and West Texas Intermediate crude dropped 1.2 percent. The Senate Foreign Relations Committee voted to authorize President Barack Obama to conduct a limited U.S. military operation in Syria, the first step toward congressional endorsement of the effort.
“A strike is not imminent and if does occur it will be relatively limited,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “The Syria risk premium is going to slowly come out of the market.”
Ultra-low-sulfur diesel for October delivery fell 1.12 cents to $3.1371 gallon on the New York Mercantile Exchange on trading volume that was 31 percent below the 100-day average at 3:22 p.m. It was the lowest settlement since Aug. 26.
The Obama administration is seeking permission to conduct a military operation in response to what the U.S. says was the Syrian government’s use of chemical weapons against civilians.
Supplies of distillates, including diesel and heating oil, probably rose 600,000 barrels last week, according to the median estimate of 12 analysts in a survey by Bloomberg. The Energy Information Administration is scheduled to report last week’s inventories at 11 a.m. tomorrow in Washington, a day later than usual because of the Sept. 2 U.S. Labor Day holiday.
ULSD’s crack spread versus WTI rose 84 cents to $24.53 a barrel while the premium over Brent widened 30 cents to $16.85.
Gasoline was little changed as seasonal maintenance in Europe may reduce exports of the motor fuel to the U.S.
Exxon Mobil Corp.’s refinery in Antwerp, Belgium, will shut the end of this month for repairs.
Maintenance will lower European refining capacity by 1.3 million barrels a day in September and 1.6 million in October, said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a London research firm. U.S. plant work will occur primarily in October and will reduce crude demand by 900,000 barrels a day, she said.
“We’re are going into maintenance season in Europe and that could reduce availability of imports into the East Coast,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
U.S. gasoline supplies probably fell 700,000 barrels last week, according to the survey. Inventories were 5 percent above the five-year average in the seven days ended Aug. 23 and demand dipped to a five-week low, government data show.
“The gasoline season is over and this should be the swan song for it unless something escalates in Syria,” said Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida.
Gasoline for October delivery fell 0.03 cent to $2.8643 a gallon. Trading volume was 18 percent below the 100-day average.
October gasoline’s premium to November gasoline narrowed 0.51 cent to 2.21 cents, the smallest gap for the contracts nearest to expiration since July 8, indicating less immediate concern about supply.
The motor fuel’s crack spread versus West Texas Intermediate crude widened $1.30 to $13.07 a barrel. The fuel’s premium over Brent gained 76 cents to $5.39.
Pump prices, averaged nationwide, fell 0.2 cent to $3.589 a gallon, Heathrow, Florida-based AAA said today on its website. Retail prices are 23.5 cents below a year earlier, AAA data show.
--With assistance from Kathleen Hunter and Laura Litvan in Washington. Editors: David Marino, Richard Stubbe