Gasoline Reaches Seven-Month High on Signs Demand to Rise

Apr 17, 2014 4:01 pm ET

April 17 (Bloomberg) -- Gasoline climbed to a seven-month high amid lower supplies and signs that demand for the motor fuel will grow.

Futures gained 0.5 percent. Gasoline stockpiles are the lowest since Nov. 15, according to Energy information Administration data. Demand over the past four weeks was 4.6 percent greater than a year ago, with pump prices at the highest since July. U.S. jobless claims are hovering near 2007 lows and consumer confidence is up.

“You’ve had two weeks in a row of really strong data in the weekly jobless claims,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy. “I always say, no matter how high the price of gasoline goes, people will pay it to get to their job.”

May-delivery gasoline rose 1.42 cents to $3.0547 a gallon on the New York Mercantile Exchange, the highest settlement since Aug. 29. Volume was 17 percent above the 100-day average as of 2:50 p.m. Prices are up 1.3 percent this week. Nymex trading is closed tomorrow for Good Friday.

Gasoline inventories were down 9.9 percent in eight weeks of contractions as refiners performed seasonal maintenance and sold off stocks of winter-grade gasoline.

“You are expecting a seasonal pickup in demand and gasoline supplies are very low,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.

Jobless Claims

Jobless claims increased by 2,000 to 304,000 in the week ended April 12 from a revised 302,000 the prior period that was the lowest since September 2007, a Labor Department report showed today. The total number of people receiving benefits fell by 11,000 to 2.74 million in the week ended April 5, the fewest since December 2007.

The Bloomberg Consumer Comfort Index climbed from a nine- week low, reflecting more upbeat views on the economy, finances and buying climate.

The average U.S. pump price rose 0.4 cent to $3.657 a gallon, the highest since July 23, according to data from Heathrow, Florida-based AAA. Prices are 13.8 cents higher than a year ago.

May gasoline’s crack spread versus West Texas Intermediate crude widened 6 cents to $24 a barrel. The motor fuel’s premium to European benchmark Brent increased 57 cents to $17.43, based on June contracts.

Ultra low sulfur diesel for May delivery fell 0.24 cent to settle at $3.082 a gallon on volume that was 3.4 percent below the 100-day average. Prices have gained 2.6 percent this week.

Diesel’s crack spread versus WTI fell 64 cents to $22.04 a barrel, based on May contracts. The premium to Brent widened 4 cents to $16.52, based on June contracts.

--With assistance from Victoria Stilwell in Washington.