Gasoline Climbs to 3-Month High on Durable Goods, French Strike

Dec 24, 2013 2:14 pm ET

Dec. 24 (Bloomberg) -- Gasoline rallied to a three-month high as U.S. durable goods orders rose more than forecast and as strikes at French refineries continued for a twelfth day, reducing shipments of the motor fuel to the U.S. East Coast.

Futures climbed as bookings for goods meant to last at least three years jumped 3.5 percent in November, a Commerce Department report showed today in Washington. The median estimate of 75 economists surveyed by Bloomberg called for a 2 percent advance. Workers at three French refineries of Total SA, the nation’s largest oil company, continued strike action amid pay disputes.

“The durable goods report is driving futures more than anything else today,” said Tom Finlon, director of Energy Analytics Group Ltd. “There’s also a lot of gasoline that’s been lost from the Total SA strikes. They’re taking fuel from Northwest Europe and removing some from the U.S.”

Gasoline futures for January delivery rose 3.39 cents, or 1.2 percent, to $2.8142 on the New York Mercantile Exchange, the highest settlement since Sept. 6. Trading volume was 41 percent below the 100-day average for the time of day at 1:53 p.m.

Floor trading on Nymex ended at 1:30 p.m., and floor and electronic trading will be closed tomorrow for the Christmas holiday.

The fuel’s crack spread versus West Texas Intermediate oil, a measure of refining profitability, added $1.06 to $18.94 a barrel, a sixth consecutive gain, according to data compiled by Bloomberg. Gasoline’s premium to Brent crude in Europe swelled $1.03 to $6.26 a barrel, the highest level based on settlement prices since Sept. 2.

Vehicle Demand

Durable goods orders for November were bolstered by a 3.3 percent gain in demand for vehicles, the most since February, according to the Commerce Department. Auto sales advanced to a 16.3 million annualized rate in November, the highest since May 2007, according to data from Ward’s Automotive Group.

The U.S. jobless rate fell to a five-year low of 7 percent the same month, while the economy grew at 4.1 percent in the third quarter, the strongest since the final three months of 2011, government data show.

Demand for the motor fuel across the U.S. rose 8 percent last week and over the past four weeks was up 3.7 percent from a year ago, according to data from the U.S. Energy Information Administration. Total petroleum demand jumped 13 percent to the highest level since 2008.

Lower Imports

Imports to the East Coast, which includes New York Harbor, the delivery point of Nymex gasoline and diesel contracts, fell 15 percent to 568,000 barrels a day in the week ended Dec. 13, EIA data show.

“The strong U.S. economic numbers we’ve seen signal continued growth in demand,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “More and more people are getting back to work and if we see that continue, that spells higher gasoline demand throughout the year.”

The average U.S. pump price rose 0.8 cent to $3.258 a gallon yesterday, a fifth consecutive rise and the highest level since Dec. 9, according to Heathrow, Florida-based AAA, the nation’s largest motoring company.

Nationwide inventories of gasoline are forecast to climb 1.1 million barrels in an EIA report this week, according to the median forecast of nine analysts in Bloomberg survey. The EIA is scheduled to release the weekly data at 11 a.m. on Dec. 27. Distillate supplies, including heating oil and diesel, probably fell by 1 million, the survey showed.

Ultra low sulfur diesel for January delivery on the Nymex gained 1.82 cents, or 0.6 percent, to $3.0783 a gallon, also a three-month high.

ULSD’s crack spread to WTI added 32 cents to $29.66 a barrel, while the fuel’s premium over Brent widened 29 cents to $16.98 a barrel.

--Editors: David Marino, Charlotte Porter