Gasoline Jumps to Five-Month High as Refinery Work Cuts Supply

Feb 18, 2014 4:49 pm ET

Feb. 18 (Bloomberg) -- Gasoline rose to the highest level in more than five months as U.S. refinery maintenance threatened to curtail production and reduce supply.

Futures climbed 1 percent. Petroleo Brasileiro SA is doing maintenance on an alkylation unit in Pasadena, Texas, while Valero Energy Corp.’s Port Arthur site is operating the larger of two crude units at a reduced rate. Supplies of the motor fuel fell 1.85 million barrels to 233.1 million as of Feb. 7, Energy Information Administration data show.

“Gasoline stocks aren’t building as they should be and refinery maintenance is preventing those stockpile builds,” said Tom Finlon, director of Energy Analytics Group Ltd. in Jupiter, Florida. “People recognize that as a good source of strength for gasoline.”

March-delivery gasoline climbed 2.7 cents to settle at $2.8323 a gallon on the New York Mercantile Exchange, the highest since Sept. 6. Volume was 26 percent above the 100-day average at 3:24 p.m. in New York.

The motor fuel’s crack spread versus West Texas Intermediate crude in Cushing, Oklahoma, a rough measure of refining profitability, dropped 99 cents to $16.53 a barrel. Gasoline’s premium to European benchmark Brent oil narrowed 18 cents to $15.57 a barrel.

Plants across the U.S. processed 15.5 million barrels a day of crude and other feedstocks in the week ended Feb. 7, while producing 8.87 million barrels a day of gasoline, according to weekly EIA data.

Peak Maintenance

Output may fall as refinery maintenance is set to reach its highest level in coming weeks. Repairs are expected to peak in March, with 1.8 million barrels a day offline, about 10 percent of nationwide capacity, according to data from Energy Aspects Ltd. and CIBC World Markets Inc.

Along the U.S. East Coast, where Nymex gasoline futures are delivered, Philadelphia Energy Solutions’ 355,000-barrel-a-day Philadelphia plant is carrying out work on a crude unit and catalytic cracker. Irving Oil Corp.’s 298,000-barrel-a-day Saint John plant in New Brunswick, which sends half of its fuel output to the U.S. Northeast, plans to shut units for work in March.

Ultra low sulfur diesel for March delivery rose 2.35 cents, or 0.8 percent, to $3.1017 a gallon on the Nymex. Trading volume was 20 percent above the 100-day average.

Diesel’s crack spread to WTI dropped $1.14 to $27.84 a barrel while the premium to Brent fell to $17.44 from $17.62.

The average U.S. pump price for regular unleaded gasoline climbed 0.8 cent to $3.366 a gallon, according to data from Heathrow, Florida-based AAA. It was the 11th consecutive gain and the highest level since Oct. 3. Prices are 36.4 cents below a year ago.

--Editors: David Marino, Richard Stubbe