BLOOMBERG

 

Gasoline Gains as Lower Refinery Output May Reduce U.S. Supplies
By Barbara Powell - Sep II, 2013


Gasoline climbed from a io-week low on speculation that lower margins may spur refiners to reduce
output even as plant breakdowns and seasonal maintenance may reduce supplies of the motor fuel.


Futures rose as the Energy Information Administration will probably report today that inventories
fell 1 million barrels last week, according to the median estimate of 12 analysts in a survey by
Bloomberg. BP Plc shut a fluid catalytic cracker yesterday for unplanned repairs at its Whiting,
Indiana, refinery. Gasoline's premium to West Texas Intermediate crude is down 70 percent since
July 16 and its crack spread versus Brent crude was down 84 percent.


"Products are reacting to a number of refining problems, including issues at BP Whiting and refiners
on the West Coast," said Andy Lipow, president of Lipow Oil Associates LLC in Houston. "Several
refiners on the Gulf Coast are considering run cuts in light of deteriorating margins."


Gasoline for October delivery rose 1.19 cents, or 0.4 percent, to $2.7476 a gallon at 9:43 a.m. on the
New York Mercantile Exchange. Trading volume was 1.1 percent below the 100-day average.


Futures fell 4.1 percent the prior two days as crude retreated on lessening concern that the U.S. would
launch a military strike against Syria over its alleged use of chemical weapons against its own people.
President Barack Obama said last night in an address from Washington that he will pursue a proposal
by Russia for Syria to surrender its stockpiles of chemical weapons to international authorities.


"The market will await the outcome of diplomatic action over the next couple of weeks," Lipow said.


Crack Spreads
The motor fuel's crack spread versus West Texas Intermediate crude widened 12 cents to $7.63 a
barrel. The fuel's premium over Brent slipped 20 cents to $3.45.


Planned maintenance at Gulf Coast, Midwest and East Coast refineries will reduce daily capacity by
1.42 million barrels in September, 795,000 barrels in October and 170,000 barrels in November, said
Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.


Pump prices, averaged nationwide, fell 0.6 cent to $3.558 a gallon, 28.5 cents below a year ago,
Heathrow, Florida-based AAA said today on its website.


The industry-funded American Petroleum Institute reported yesterday that gasoline stockpiles rose
195,000 barrels last week and supplies of distillates, including heating oil and diesel increased
807,000 barrels. The survey projected that the EIA will report that distillate inventories gained
600,000 barrels.


Ultra-low-sulfur diesel for October delivery gained 1.71 cents, or 0.6 percent, to $3.o839 a gallon,
after settling yesterday at the lowest level since Aug. 14. Trading volume was 12 percent below the
loo-day average.


ULSD's crack spread versus WTI widened 35 cents to $21.77 a barrel while the premium over Brent
increased 1 cent to $17.57.


To contact the reporter on this story: Barbara Powell in Houston at bpowe1l4 (bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
®2013 BLOOMBERG L P ALL RIGHTS RESERVED .


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE
FOR EVERYONE. OPT!ONS, CASH AND FUTURES MARKETS ARE SEPARATE AND DISTINCT AND DO NOT
NECESSARILY RESPOND IN THE SAME WAY TO SIMILAR MARKETS STIMULUS. A MOVEMENT IN THE
CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES & OPTIONS
CONTRACT BEING OFFERED. SEASONAL DEMAND AND CURRENT NEWS IN COMMODITIES ARE
ALREADY REFLECTED IN THE PRICE OF THE UNDERLYING FUTURES.