Gasoline sank as the Energy Information Administration reported East Coast stockpiles increased and imports jumped. Crack spreads narrowed.
Futures fell 0.8% and April’s premium to May narrowed, reflecting less immediate supply concern. Gasoline supplies in PADD 1, or the East Coast, expanded 651,000 barrels to 60.5 million, the highest level in almost a year, as imports climbed 21% to 599,000 barrels a day. East Coast inventories of reformulated gasoline, or RBOB, rose 1.43 million barrels to 20.3 million, the highest level since March 2011.
“That’s the crux of the gasoline market,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “Prices have been strong so naturally it would incentivize imports. There was no shortage right away, there were potential shortages in the summer and you had a lot of people getting into gasoline.”
April-delivery gasoline fell 2.35 cents to settle at $3.1247 a gallon on the New York Mercantile Exchange on volume that was 46% above the 100-day average for the time of day. April’s premium over the May contract narrowed to 1.94 cents a gallon from 2.86 cents yesterday.
The April crack spread, or gasoline’s premium over West Texas Intermediate crude on Nymex, slipped 59 cents to $40.81 a barrel, and narrowed 43 cents to $20.18 a barrel over Brent oil on the ICE Futures Europe exchange.
Futures have risen 11% this year on concern that unplanned refinery outages, coupled with heavier-than-normal seasonal maintenance and the closing of Hess Corp.’s New Jersey plant, would crimp supplies on the East Coast. The gasoline crack spread over WTI reached an all-time high of $44.03 on Feb. 22.
“There is the growing perception that the required refined products can be supplies from volumes arbitraged from Europe and Canada,” Gareth Lewis-Davies, an oil market strategist at BNP Paribas SA in London, said in a report today. “The recent strength in the gasoline crack in the face of an impending East Coast refinery closure now appears to be overdone.”
Refiners used 82.2 percent of capacity, down 2.9 percentage points from the prior week. Distillate production sank 5.1 percent to the lowest level since April 27. Gasoline output declined 6.6 percent to 8.61 million barrels a day, a seven-week low. April crude on the Nymex fell 87 cents to $89.95 as oil supplies increased 3.83 million barrels to the highest level since June.
“This week’s gasoline draw wasn’t so big and you had a big crude build,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “As refineries ramp up in the spring, you will see a lot of crude converted into gasoline.”
Total U.S. gasoline inventories fell 616,000 barrels last week to 227.9 million, the lowest level in nine weeks and fourth consecutive decline.
Supplies of distillates, including heating oil and diesel, declined 3.83 million barrels to 120.4 million, a 10-week low. Inventories in PADD 1 dropped 768,000 barrels.
Heating oil for March delivery rose 0.26 cent to settle at $2.9756 a gallon on volume that was 18% above the 100-day average for the time of day.
Gasoline at the pump, averaged nationwide, fell 1 cent to $3.727 a gallon, AAA said today on its website. It was the seventh consecutive drop. Prices, which have risen 13% this year, are 3.7 cents below a year earlier. Prices in 2012 peaked on April 4 at $3.936 after rising every day but one from March 9.