Jan. 2 (Bloomberg) -- Gasoline futures tumbled the most in two months after a report showed that U.S. inventories of the motor fuel increased last week.
The industry-funded American Petroleum Institute said Dec. 31 that supplies climbed 3.33 million barrels in the week ended Dec. 27. The Energy Information Administration will probably report tomorrow that stockpiles rose 1.38 million, according to the median estimate of eight analysts in a survey by Bloomberg. Gasoline output jumped 4.3 percent to 9.72 million barrels a day in the prior week, the most in EIA data going back to 1982.
“The market is expecting another round of builds in refined products in tomorrow’s inventory report,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “Supply is still outstripping demand.”
Gasoline for February delivery fell 9.09 cents, or 3.3 percent, to settle at $2.695 a gallon on the New York Mercantile Exchange. It was the biggest drop for the front-month contract since Nov. 1. Trading volume was 16 percent below the 100-day average at 3:13 p.m.
Prices gained 5.7 percent in the three months ended Dec. 31, the biggest fourth-quarter increase since 2010. The motor fuel retreated 0.9 percent in 2013, the first annual decline since 2008.
A French refinery strike reduced imports to the U.S. East Coast earlier in the month just as demand increased. Total SA’s five refineries in France returned to operation as of Dec. 31 after a strike that began Dec. 13 and reduced shipments of gasoline to the U.S. from Europe.
PJK International BV reported today that stockpiles of gasoil and gasoline in independent storage at Europe’s Amsterdam-Rotterdam-Antwerp oil-trading hub rose in the week ended today. Gasoil inventories climbed 8.2 percent while gasoline stocks increased 5.2 percent to the highest level since May 23.
“Gasoline’s weakness is the high production we saw last week coupled with the end of the French refinery strike,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Futures also fell as crude weakened. West Texas Intermediate crude on the Nymex slipped 3 percent to a one-month low of $95.44 a barrel as equities sank and a stronger dollar reduced the investment appeal of commodities. The Standard & Poor’s 500 Index retreated 0.9 percent and the Bloomberg Dollar Index rose 0.6 percent.
Brent crude declined 2.7 percent to $107.78 a barrel on the London-based ICE Futures Europe exchange as protesters at Libya’s Al Sharara field ended a three-month blockade and said work can resume.
“The return of Libya to the world market is clearly bearish,” Lebow said. “The weakness in the equity market and the stronger dollar are bearish factors.”
The motor fuel’s crack spread versus WTI, a rough measure of refining profitability, narrowed 84 cents to $17.75 a barrel. Gasoline’s premium to London-traded Brent crude fell 80 cents to $5.41 a barrel.
The average U.S. pump price climbed 0.2 cent to $3.325 a gallon, according to Heathrow, Florida-based AAA. Prices have risen for 14 consecutive days and are the highest since Oct. 23.
The EIA is scheduled to report last week’s inventories at 11 a.m. tomorrow in Washington. The survey projected that supplies of distillates, including diesel and heating oil, rose 750,000 barrels.
ULSD for February delivery declined 7.85 cents, or 2.6 percent, to $2.9867 a gallon, the biggest drop since June 20. Trading volume was 2.2 percent below the 100-day average.
Futures climbed 3.6 percent in the fourth quarter, the largest three-month gain since the third quarter of 2012. Diesel rose 1.1 percent in 2013.
The fuel’s crack spread versus West Texas Intermediate crude narrowed 32 cents to $30 a barrel. The premium over European benchmark Brent fell 28 cents to $17.66.
--Editors: David Marino, Richard Stubbe