Gasoline Futures Slide to One-Month Low on Rising Inventories

Jan 13, 2014 4:11 pm ET

Jan. 13 (Bloomberg) -- Gasoline futures slid to a one-month low as supplies were poised to climb from a 10-month high and as refineries started up units after unplanned outages.

U.S. gasoline inventories jumped to the highest level since March and demand slid 7 percent in the week ended Jan. 3, according to Energy Information Administration data. Husky Energy Inc. said its Lima, Ohio, refinery is bringing units online after a power failure. PBF Energy Inc. is working to restart its Paulsboro, New Jersey, plant after a loss of steam.

“Inventories are pretty high, and with a couple more months of winter and high refinery runs, they’re going to push even higher,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Gasoline for February delivery fell 3.5 cents, or 1.3 percent to settle at $2.6341 a gallon on the New York Mercantile Exchange. Trading volume was 1 percent above the 100-day average as of 3:33 p.m.

Futures, which gained 0.8 percent last week, have dropped 5.4 percent this year.

“We’re now in the weakest demand period of the year, and refineries are restarting, adding to supply,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

The EIA is scheduled to report last week’s inventories on Jan. 15. Gasoline stockpiles probably increased 2.2 million barrels, according to the median estimate of eight analysts in a survey by Bloomberg.

The motor fuel’s crack spread versus West Texas Intermediate crude, a rough measure of refining profitability, narrowed 55 cents to $18.83 a barrel. Gasoline’s premium to London-traded Brent crude fell 97 cents to $3.88.

Pump Price

The average U.S. pump price fell 0.1 cent to $3.312 a gallon, according to Heathrow, Florida-based AAA. Prices are 0.5 cent above a year earlier.

Ultra low sulfur diesel for February delivery fell 0.74 cent to $2.9333 a gallon on volume that was 36 percent above the 100-day average. Prices were up 0.13 cent last week and have declined 4.7 percent this year.

U.S. distillate stocks climbed 5.83 million barrels in the week ended Jan. 3 to 125 million, the highest level in 11 weeks, EIA data show. The agency will probably report that distillate supplies rose 1.38 million barrels, according to the survey.

Diesel’s crack spread versus WTI widened 61 cents to $31.40 a barrel. The premium over European benchmark Brent increased 19 cents to $16.45.

--Editors: David Marino, Bill Banker