Sept. 11 (Bloomberg) -- Gasoline sank to a nine-month low after the Energy Information Administration reported that Gulf Coast inventories jumped the most since January as demand slid.
Futures fell 0.9 percent. Stockpiles of the motor fuel in PADD 3, which includes the Gulf Coast, home to 45 percent of U.S. refining capacity, rose 2.31 million barrels to 77.9 million, the highest seasonal level in weekly data going back to 1990. Consumption slid 5.4 percent to 8.61 million barrels a day, the lowest level since May 10. October gasoline’s premium to later months narrowed.
“The pressure is on the Gulf where they had the biggest build in inventory,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The bottom fell out of demand, particularly for gasoline, the weakest segment of the petroleum complex.”
Gasoline for October delivery fell 2.35 cents to $2.7122 a gallon on the New York Mercantile Exchange, the lowest settlement since Jan. 15. Trading volume was 16 percent above the 100-day average as of 3:47 p.m.
The October contract’s premium to November futures declined 0.32 cent to 0.8 cent.
Nationwide gasoline inventories rose for the first time in five weeks, increasing 1.66 million barrels to 217.6 million in the week ended Sept. 6. Gasoline supplies in PADD 1, which includes New York Harbor, the delivery point for Nymex products, fell 1.44 million barrels to 56.8 million. PADD 1 gasoline imports dropped 6.5 percent to 388,000 barrels a day.
“At least PADD 1 was down,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “It was the only bullish thing in the report and it was counterbalanced by the big build in PADD 3. Weekly demand was bearish.”
Futures fell 4.1 percent the prior two days as crude retreated on lessening concern that the U.S. would launch a military strike against Syria over its alleged use of chemical weapons against its own people. President Barack Obama said last night in an address from Washington that he will pursue a proposal by Russia for Syria to surrender its stockpiles of chemical weapons to international authorities.
“The market will await the outcome of diplomatic action over the next couple of weeks,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The motor fuel’s crack spread versus West Texas Intermediate crude narrowed $1.16 to $6.35 a barrel and is down 54 percent this month. The fuel’s premium over Brent slipped $1.24 to $2.41, a drop of 67 percent in September.
“Refiners are in a box here,” Evans said. “They still have some pretty good business volumes on the distillate side of the market, and that will help sustain overall margins and may tempt them to keep production up.”
Pump prices, averaged nationwide, fell 0.6 cent to $3.558 a gallon, 28.5 cents below a year ago, Heathrow, Florida-based AAA said today on its website.
Distillate inventories rose 2.59 million barrels to 132.2 million. Distillate demand slipped 281,000 barrels to 3.52 million, the least since March 8.
Ultra-low-sulfur diesel for October delivery gained 0.5 cent to $3.0718 a gallon. Trading volume was 8.4 percent below the 100-day average.
ULSD’s crack spread versus WTI gained 4 cents to $21.46 a barrel while the premium over Brent fell 4 cents to $17.52.
--With assistance from Henry Meyer in Moscow. Editors: David Marino, Richard Stubbe