Gasoline poised to fall as refineries returning

Plant Shutdowns

Irving is performing seasonal work on sections of the 298,800-barrel-a-day Saint John plant, which sends more than half of its fuel output to the northeast U.S.

Across the Atlantic, Royal Dutch Shell Plc has shut parts of the Pernis refinery in the Netherlands for maintenance. Pernis can process 400,000 barrels a day, the most in Europe. Valero Energy Corp. is closing all the main production units at its 220,000-barrel-a-day Pembroke refinery in Wales while the only crude unit undergoes an eight-week turnaround.

Gasoline stockpiles in independent storage in Amsterdam- Rotterdam-Antwerp, Europe’s oil-trading hub, dropped to the lowest level in almost a year, data from PJK International BV show. Inventories fell 14 percent to 558,000 metric tons in the week to Sept. 27, the least since Oct. 6.

Amuay Refinery

Petroleos de Venezuela SA’s 645,000-barrel-a-day Amuay refinery, the biggest in the Western Hemisphere, is running below capacity after an Aug. 24 explosion, reducing supply in the Caribbean and South America and increasing demand for cargoes from Europe and the U.S. Gulf.

Traders have been betting on scarce supplies for months. Net-long positions held by hedge funds and other large speculators increased 62 percent to 80,858 contracts on Sept. 25 from July 17, Commodity Futures Trading Commission data show.

Money managers have held an average long position this year of 74,087 contracts, up from an average of 41,715 during the same period in the previous five years.

“The net length held by money managers normally declines as summer driving season ends,” Khan said.

Consumption of gasoline in the week ended Sept. 28 was 8.72 million barrels a day, 1.1 percent below last year, according to MasterCard’s SpendingPulse report.

The premium of gasoline over West Texas Intermediate crude oil, or the crack spread, which gives an indication of the profit refiners may earn from making fuel, was $30.45 a barrel at the end of September, more than three times the $8.51 average of the past five years, encouraging refiners to boost output. The spread was $29.44 a barrel today.

“When refineries restart those units, they’re going to run quite hard because U.S. margins are some of the highest since 2008,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consultant in London. “You’re going to continue to see strength in prices the next couple of weeks as refineries are still out, but early November onwards you can expect them to moderate.”

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