Gasoline futures jump to four-month high; contango narrows

April-September

April gasoline’s premium over September widened 2.78 cents to 27.7 cents a gallon, indicating concern that supplies will drop heading into the peak period for U.S. driving demand, which typically starts in late May.

“The concern specifically is a shortage of blending components, which you need more of for summer,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London. “Petrochemicals are running at max capacity because of cheap natural gas and they’re also looking for cheap feed stock.”

Hess Corp. will shut its Port Reading, New Jersey, plant later this month. Lipow estimated that the refinery can produce 50,000 barrels a day of the motor fuel and represents 7.7% of PADD 1 gasoline-making capacity.

“The market is expecting tight RBOB supplies in the Harbor because Hess Port Reading will be shut down and it doesn’t see much resupply of summer-grade RBOB out of Europe this summer,” Lipow said.

Heating oil for March delivery rose 0.49 cent to settle at $3.2237 a gallon on the Nymex on volume that was 2.3% above the average.

Inventories of distillate fuels, including heating oil and diesel, declined 3.68 million barrels to 125.9 million, the EIA reported. Heating oil supplies in PADD 1 increased 430,000 barrels.

The retail price for regular gasoline, averaged nationwide, rose 1 cent to $3.628 a gallon, the highest level since Oct. 22, AAA said today on its website. Costs have climbed 10% this year and are 11.5 cents above a year ago.

Bloomberg News

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