Gasoline fell as Hess Corp. returned its New Jersey refinery to full production and as crude declined on optimism that Israel and members of the Islamist Hamas movement will agree to a cease-fire.
Futures slid as the Port Reading plant ran at full rates for the first time since Hurricane Sandy’s Oct. 29 landfall. Oil sank 2.8 percent after Egyptian President Mohamed Mursi said a cease-fire would be agreed to today. U.S. Secretary of State Hilary Clinton arrived in Israel today to participate in the peace talks.
“The expectation is a diplomatic breakthrough will be achieved,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for December delivery fell 4.2 cents, or 1.5 percent, to settle at $2.7125 a gallon on the New York Mercantile Exchange, the largest decline since Nov. 7.
Mursi said that what he termed Israeli aggression against the territory will end today, the state-run Middle East News Agency reported.
Futures settled yesterday at the highest level this month amid concern that Israel’s attacks on the Gaza Strip might spread unrest in the Middle East, disrupting oil supplies.
“It looks like the cease fire is imminent and we’re selling off on that news,” said Fred Rigolini, vice president of Paramount Options Inc. in New York. “Yesterday, there was a little anxiety that if this persisted it could bleed into other countries.”
The Energy Department will probably report tomorrow that gasoline supplies rose 1 million barrels last week, according to the median estimate of 11 analysts in a survey by Bloomberg.
East Coast stockpiles fell to a four-year low in the week ended Nov. 9 as Sandy disrupted production and distribution. Imports recovered after hitting the lowest level since December 1999 in the prior week. MasterCard Inc.’s SpendingPulse report showed demand at the pump in the seven days ended Nov. 9 slid to the lowest since March.
“Hess Port Reading coming back is bringing us down a bit and gasoline supplies are going to build a little bit as we see the imports go back up and on weak demand,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
December-delivery heating oil fell 3.59 cents, or 1.2 percent, to $3.0392 a gallon on the exchange, after settling yesterday at the highest level since Oct. 30. The department will probably report that supplies of distillates, including heating oil and diesel, declined 1 million barrels, according to the survey.
Futures pared declines after the El Universal newspaper in Caracas reported that Petroleos de Venezuela SA shut a 62,000 barrel-a-day flexicoker at the Amuay refinery, the largest plant in Venezuela.
The premium of heating oil over crude, or the crack spread, based on January contracts, widened $1.06 to $41.28 a barrel, while the gasoline crack spread gained 69 cents to $26.16 a barrel.
The 645,000-barrel-a-day refinery has been running at reduced rates since an Aug. 25 explosion killed more than 40 people.
“Amuay is down again, they’re having issues with the flexicoker,” Carl Larry, president of Oil Outlooks & Opinions LLC in Houston, said by phone. “People are waiting to see whether it’s going to come back online or not come online.”
The average nationwide cost for regular gasoline slipped 0.4 cent to $3.412 a gallon, AAA said today on its website. That’s the lowest price since July 16. The pump price reached a 2012 high of $3.936 on April 4.