Gasoline futures rise to highest level in nearly six months

Gasoline futures charged to their highest level in nearly six months on Wednesday after the U.S. government released data showing a large decrease in domestic supplies of unleaded gas.

Last week's decline in commercial gasoline inventories was the fourth in as many weeks, and comes as refiners conduct maintenance on their facilities ahead of the summer driving season, when fuel demand peaks.

Gasoline futures rose 6.97 cents to settle at $1.9542 a gallon (3.8 liters) on the New York Mercantile Exchange, just six cents shy of the Oct. 4 settlement of $2.0157. Back then, the U.S. fuel market was grappling with the loss of significant refining capacity in the aftermath of Hurricane Katrina.

Light sweet crude for May delivery gained 38 cents to close at $66.45 a barrel, the highest close since Feb. 1 and 23 percent above year-ago levels.

May Brent crude on London's ICE Futures exchange rose 58 cents to settle at $65.55 a barrel.

Heating oil futures rose 2.43 cents to $1.852 a gallon, while natural-gas futures rose 1.9 cent to $7.233 per 1,000 cubic feet.

In its weekly petroleum report, the Energy Department said gasoline inventories fell by 5.4 million barrels last week to 216.2 million barrels, about even with year ago levels. The agency also said that motor gasoline demand averaged 9.1 million barrels a day over the last four weeks, which is 1.3 percent above year-ago levels.

The average retail price of gasoline in the U.S. is $2.50 a gallon, up 34.5 cents from a year ago.

Inventories of distillate fuel, which include heating oil and diesel, slid by 2.5 million barrels to 124.2 million barrels, but that was 15.4 percent higher than last year. U.S. crude inventories rose by 2.1 million barrels to 340.7 million barrels, or 8.2 percent higher than last year.

Barclays Capital said the market would remain particularly sensitive to gasoline inventory levels because of concerns that changes to gasoline specifications could result in further constraints on capacity.

The gasoline additive MTBE, which has been found to contaminate groundwater, is being phased out of gasoline next month by refiners, and many analysts worry that the fledging ethanol industry to which the U.S. will turn to as an alternative might not be ready to satisfy the expected summertime jump in demand.

Prices also continue to respond to concerns about supplies from Nigeria and the Middle East.

The outlook on Nigerian oil output remained uncertain. Royal Dutch Shell PLC, the largest foreign oil company operating in the country, has shut in nearly half of its Nigerian production and says it won't resume operations until the country is safe enough for its workers.

Iran, the No. 2 oil producer in OPEC, also remains a potential source of concern. It has been referred to the U.N. Security Council over fears it may want to misuse its nuclear program to make weapons, but the council has been at loggerheads over U.S.-led efforts to ratchet up the pressure on Tehran, reports AP.

O.Ch.

Subscribe to Pravda.Ru Telegram channel, Facebook, RSS!

Author`s name Editorial Team
X