Gasoline Slides to One-Month Low on Speculation Supply to Rise

May 06, 2014 4:21 pm ET

May 6 (Bloomberg) -- Gasoline futures slipped to a one- month low on speculation that supplies rose last week as refineries restarted units after repairs.

Futures fell 0.8 percent after gaining as much as 0.5 percent earlier. The Energy Information Administration will probably report tomorrow that gasoline inventories rose 500,000 barrels last week, according to the median estimate of 10 analysts in a survey by Bloomberg.

“The refiners are coming out of maintenance and it looks like they’re going to come storming back and producing product at a record pace,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

June-delivery gasoline fell 2.34 cents to $2.8858 a gallon on the New York Mercantile Exchange, the lowest settlement since April 2. Prices have fallen 6.8 percent since reaching a year- to-date high of $3.0952 on April 22. Volume was 35 percent above the 100-day average as of 2:52 p.m.

Bullish bets on gasoline increased 8.6 percent to 82,891 futures and options in the week ended April 29, the most since February 2013, according to the Commodity Futures Trading Commission.

“One of big issues for gasoline is the length in the market,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “As the market moves lower there is going to be more liquidating pressure.”

Inventory Report

The EIA is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington. An increase would be the second in two weeks. Supplies in the week ended April 25 rose 1.56 million barrels to 211.6 million as refineries kept rates at 91 percent for a second week.

“Stocks are building and people are expecting more builds,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.

The average U.S. pump price fell 0.6 cent to $3.667 a gallon, according to data from Heathrow, Florida-based AAA today. Prices are 14.6 cents higher than a year ago.

Gasoline’s crack spread versus WTI crude narrowed $1 to $21.70 a barrel. The motor fuel’s premium to Brent crude fell 32 cents to $14.14.

Ultra low sulfur diesel for June delivery dropped 1.87 cents, or 0.6 percent, to $2.8877 a gallon, the lowest settlement since April 2. Volume was 18 percent below the 100- day average. The survey projected that supplies of distillates, including diesel and heating oil, rose 750,000 barrels.

Diesel’s crack spread versus WTI fell 81 cents to $21.78 a barrel. The premium to Brent fell 13 cents to $14.22.