Gasoline fell to a three-week low after the Energy Department reported that inventories of the motor fuel rose the most last week since the terrorist attacks on the World Trade Center in New York.
Futures sank 1.9 percent as gasoline supplies climbed 7.86 million barrels in the seven days ended Nov. 30 to 212.1 million, the biggest increase since the week ended Sept. 21, 2001. Stockpiles jumped as demand slipped 0.9 percent and refinery rates reached the highest seasonal level since 2005.
“Bearish? This is the Kodiak grizzly of bearish reports,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.
Gasoline for January delivery fell 5.12 cents to $2.6378 a gallon on the New York Mercantile Exchange, the lowest settlement since Nov. 8.
The median estimate of 12 analysts surveyed by Bloomberg was for a 1.55 million-barrel gain. Supplies have risen 9.74 million barrels in two weeks.
The premium of gasoline over crude on Nymex, or the crack spread, shrank $1.53 to $22.91 a barrel, the narrowest margin since Oct. 23.
“It’s a very bearish report as inventories swell and pressure prices and refining margins,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline demand declined 73,000 barrels to 8.35 million barrels a day, 2.6 percent below a year earlier.
Demand has slipped for three weeks to the lowest seasonal level since 2000 after jumping 7.2 percent in the seven days ended Nov. 9 as wholesalers restocked following disruptions caused by Hurricane Sandy.
“The pipeline to the East Coast had been full in the wake of Hurricane Sandy and as we moved past Thanksgiving demand has declined,” Lipow said.
Refiners used 90.6 percent of capacity, up 2 percentage points to the highest level since the week ended Aug. 24.
The largest increase in gasoline stockpiles was on the Gulf Coast, or PADD 3 region, where inventories rose 2.47 million barrels to 77.3 million, the highest level since September 2011. PADD 3 refiners used 95.2 percent of capacity.
“The refiners are converting crude surplus into product surplus because it’s been profitable to refine crude oil,” Lipow said.
Distillate supplies, which include heating oil and diesel, climbed 3.03 million barrels to 115.1 million in the seven days ended Nov. 30, department data show. Analysts estimated a 850,000-barrel increase, according to the survey.
January-delivery heating oil fell 1.33 cents, or 0.4 percent, to $2.9907 a gallon, the first time the front-month contract has settled below $3 since Nov. 15.