BLOOMBERG

 

Gasoline Heads for Biggest Weekly Gain
Since December on Repairs

By Barbara Powell - Feb 7, 2014


Gasoline futures headed for the biggest gain in seven weeks on speculation seasonal maintenance
will tighten supply.


Prices increased as much as 1.3 percent. An average of 1.6 million barrels a day of U.S. refining
capacity will be offline in February for planned and unplanned work, according to Amrita Sen,
chief oil market strategist at Energy Aspects Ltd., a research company in London. Another 1.4
million barrels in March and 850,000 barrels in April are scheduled to shut for turnarounds.


“You’ve got a lot of maintenance now, the economy has been showing improvement and people
are anticipating a strong summer,” Sen said.


March-delivery gasoline rose 2.74 cents, or 1 percent, to $2.7104 a gallon at 10:10 a.m. on the
New York Mercantile Exchange, after touching $2.7187, the highest intraday level since Jan. 2.
Trading volume was 76 percent above the 100-day average.


Futures prices have climbed an average of 4.3 percent in February and 10 percent in March
during the past five years, according to Nymex data compiled by Bloomberg.


Phillips 66 is performing scheduled work at its Alliance plant in Louisiana, according to the
company. Citgo Petroleum Corp. began shutting both plants at its Corpus Christi, Texas, refinery
on Feb. 5 for about 35 days of planned work, a person with knowledge of the work said
yesterday.


Gasoline Discount

Gasoline’s discount to March ultra low sulfur diesel futures narrowed 0.45 cent to 30.76 cents,
after being as wide as 40.06 cents on Feb. 3.


“If you take a broader view, this seasonally is a pretty good time for gasoline,” said Andrew
Lebow, a senior vice president at Jefferies Bache LLC in New York. “Look at February and
March. They’re usually stronger. We’ve got turnarounds coming up and gasoline had become
too cheap relative to heat.”


The motor fuel’s crack spread versus West Texas Intermediate, a rough measure of refining
profitability, widened 81 cents to $15.66 a barrel. Its premium to London-traded Brent crude
climbed 53 cents to $6.03.


“People are plowing into gasoline and out of heating oil, looking ahead to gasoline season,” said
Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Clearly, we’re seeing more
length coming into the gasoline market.”


The average U.S. pump price fell 0.1 cent to $3.269 a gallon, according to data from Heathrow,
Florida-based AAA. Prices have fallen 5.4 percent this year and are 28.6 cents below a year ago.


Ultra low sulfur diesel for March delivery advanced 2.29 cents, or 0.8 percent, to $3.018 a gallon
on trading volume that was 15 percent above the 100-day average.


Diesel’s crack spread versus WTI widened 62 cents to $28.57 a barrel. The premium over
European benchmark Brent rose 35 cents to $18.95.


To contact the reporter on this story: Barbara Powell in Houston at bpowell4@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE
FOR EVERYONE. OPTIONS, 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