Gasoline Rises to Month’s High on Speculation Supplies Dropped

Apr 08, 2014 4:01 pm ET

April 8 (Bloomberg) -- Gasoline futures rose to the highest price in a month on speculation that U.S. inventories of the motor fuel declined last week.

Futures gained 1.8 percent. The Energy Information Administration will probably report tomorrow that gasoline stockpiles fell 1 million barrels in the week ended April 4, according to the median estimate of 10 analysts in a survey by Bloomberg. It would be the seventh consecutive drop as U.S. refiners conduct maintenance before the spring and summer driving period.

“Gasoline is supported on the expectation that inventories will continue to draw as the spring driving season commences,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

May-delivery gasoline advanced 5.41 cents to $2.9801 a gallon on the New York Mercantile Exchange, the highest settlement since March 4. Discounting rollover days, it was the largest one-day gain since Feb. 7. Volume was 47 percent above the 100-day average as of 3:15 p.m.

Inventories in the week ended March 28 were the lowest since November, according to data from the EIA, the Energy Department’s statistical arm. The agency is scheduled to report last week’s supplies at 10:30 a.m. tomorrow in Washington.

The motor fuel widened gains as West Texas Intermediate crude advanced amid speculation that supplies at Cushing, Oklahoma, the delivery point for the contract, declined for a 10th week. WTI crude for May delivery climbed 2.1 percent to $102.56 on the Nymex, the highest settlement since March 7.

Declines Seen

“Gasoline inventories should be down and I think there’s more of a draw in Cushing than is being called for,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund focusing on energy. Kilduff projects Cushing stocks fell 725,000 barrels and gasoline supplies dropped 1.1 million.

The motor fuel’s crack spread versus WTI, based on closing prices, widened 15 cents to $22.60 a barrel. Gasoline’s premium to Brent increased 42 cents to $17.49.

The average U.S. pump price rose 0.7 cent to $3.59, the highest since Sept. 4, according to data from Heathrow, Florida- based AAA.

Ultra low sulfur diesel for May delivery gained 4.37 cents, or 1.5 percent, to settle at $2.9344 a gallon on volume that was 26 percent below the 100-day average. The survey projected that inventories of distillates, including diesel and jet fuel, fell 250,000 barrels last week.

Diesel’s crack spread versus WTI narrowed 28 cents to $20.68. The premium to Brent fell 1 cent to $15.57.