Sept. 17 (Bloomberg) -- Gasoline slid to the lowest level since December as U.S. inventories of winter-grade gasoline are forecast to climb on lower demand for the motor fuel.
Futures sank as the Energy Information Administration may report tomorrow that stockpiles rose 500,000 barrels last week, according to the median estimate of 11 analysts in a Bloomberg survey. In the prior week, supplies on the Gulf Coast, home to 45 percent of U.S. refining capacity, were the highest seasonally in weekly data begun in 1990, according to the EIA.
“Winter-grade gasoline margins were so good so early there was an incentive to make a lot of it,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “So now there is a supply buffer.”
Gasoline for October delivery fell 5.55 cents, or 2 percent, to $2.6611 a gallon on the New York Mercantile Exchange, the lowest settlement since Dec. 17. Trading volume was 11 percent above the 100-day average.
Gasoline, which has declined 12 percent in September, is the worst performer this month in the Standard & Poor’s GSCI index of 24 commodities. Prices have retreated 15 percent since settling at $3.1343 on July 16.
The motor fuel’s crack spread versus West Texas Intermediate crude narrowed $1.16 to $6.35 a barrel and has dropped 46 percent this month. The fuel’s premium over Brent fell 51 cents to $3.09, down from $7.37 on Aug. 30.
Gasoline and ultra-low sulfur diesel weakened as Brent fell relative to WTI, reducing production costs for East Coast and Gulf Coast refineries using crude priced off the London benchmark. Brent’s premium to WTI narrowed 51 cents to $3.37 a barrel, down from $6.36 at the end of last month. Brent fell as Libya began restoring production that was idled by labor disputes at the country’s oil terminals.
“Products are still tracking Brent,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “With Libya coming back online, Brent is getting hit on the chin and the Brent-WTI spread is back down.”
Pump prices, averaged nationwide, fell 0.5 cent to $3.512 a gallon, 35 cents below a year ago, Heathrow, Florida-based AAA said today on its website. Prices have fallen 15 consecutive days to the lowest level since July 9.
Ultra-low sulfur diesel dropped to a five-week low, sliding the most since June 20, as rising European gasoil supplies and lower prices indicated less opportunity for U.S. exports.
Gasoil fell 2 percent to $925.75 a metric ton on the ICE Futures Europe exchange. Gasoil stockpiles in independent storage at Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub rose 4.4 percent in the week ended Sept. 12, according to PJK International BV. In the U.S., distillate inventories probably rose 500,000 barrels last week, according to the survey.
“Overall, there are more supplies,” Sen said. “Chinese companies seem to have received large export quotas for Q4, so east-west flows on gasoil are also going to be higher.”
Ultra-low-sulfur diesel for October delivery slid 6.54 cents, or 2.1 percent, to $2.9983 a gallon. Trading volume was 75 percent above the 100-day average. Prices have dropped 3.8 percent in three days and are the lowest since Aug. 8.
ULSD’s crack spread versus WTI narrowed $1.58 to $20.51 a barrel. The premium over Brent fell 79 cents to $17.79.
The Energy Information Administration is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington.
--With assistance from Maher Chmaytelli in Dubai. Editors: Richard Stubbe, Charlotte Porter