Nov. 21 (Bloomberg) -- Gasoline surged to a five-week high on speculation repairs at the largest oil refinery in the U.S. and fires at plants in Europe will curtail supplies as demand picks up heading into the holiday season.
Motiva Enterprises LLC began work at its Port Arthur, Texas, plant, the country’s largest, on Nov. 19, according to Destin Singleton, a company spokeswoman based in Houston. Exxon Mobil Corp.’s Rotterdam refinery had a small fire today and a unit was shut at Total SA’s Antwerp plant after an explosion Nov. 19. Lower production and imports may further reduce stockpiles of gasoline, which fell to a one-year low last week.
"This is what’s moving RBOB up this morning," said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois-based consulting company. "When you see a big refinery like that indicating some problems, you see values rise in futures and crack spreads."
Gasoline for December delivery gained 5.74 cents, or 2.2 percent, to $2.7204 a gallon on the New York Mercantile Exchange at 12:23 p.m. and touched $2.7234, the highest intraday level since Oct. 16. Trading volume was 27 percent above the 100-day average for the time of day. Futures are down 3.3 percent in 2013.
Demand for the motor fuel in the four weeks ended Nov. 15 was 3.8 percent above a year earlier, Energy Information Administration data show. Pump prices, which sank to $3.179 a gallon on Nov. 11, may increase above $3.25, Michael Green, a Washington-based spokesman for AAA, the nation’s largest motoring group, said Nov. 19. Prices climbed 0.8 cent to $3.22 yesterday, according to Heathrow, Florida-based AAA.
Fuel consumption, traditionally lower after summer, may increase during the approaching Thanksgiving and Christmas holidays when Americans use their cars and trucks to shop and visit families.
"We’re now going into the holiday shopping season and demand picks up, which should halt any further decline at this point," said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.
Gasoline’s crack spread versus West Texas Intermediate oil, a rough measure of refining profitability widened 59 cents to $17.86 a barrel. The fuel’s premium to European benchmark Brent oil gained 75 cents to $3.81.
A fluid catalytic cracker was shut late yesterday at Motiva’s Port Arthur plant, according to a report today from Genscape Inc., a Louisville, Kentucky-based energy-information provider. One unit at Motiva’s 250,000-barrel-a-day Norco, Louisiana, refinery remains shut for a turnaround that began in early October, Singleton said by phone.
Inventories of gasoline sank to 208.9 million barrels in the week ended Nov. 15, the lowest level since Nov. 23, 2012, EIA data show.
Supplies have dropped as maintenance was extended at Gulf Coast and East Coast refineries, including Marathon Oil Corp.’s 600,000-barrel-a-day Garyville, Louisiana, refinery and Phillip 66’s 238,000-barrel Bayway site in New Jersey, the closest plant to the New York Harbor delivery point for Nymex futures. Bayway will take an extra two or three weeks to complete work begun in October, a person familiar with operations said on Nov. 8.
Futures also climbed along with crude as jobless claims dropped more than forecast and as talks continued over Iran’s nuclear program.
Applications for unemployment benefits fell by 21,000 to 323,000 in the week ended Nov. 16, the fewest since the week ended Sept. 29, the U.S. Labor Department said today in Washington. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 335,000.
Iran’s Foreign Minister Mohammad Javad Zarif met with European Union foreign policy chief Catherine Ashton for about two hours in the Swiss City, according to an EU statement. Ashton is negotiating on behalf of the five permanent members of the United Nations Security Council plus Germany and will convene another round of discussions with Zarif later today.
Exxon said there were no injuries and no impact to operations by an oil-gas fire that broke out at the Rotterdam, Netherlands, refinery.
"These items are affecting overall market direction," said Tom Finlon, director of Energy Analytics Group Ltd. in Jupiter, Florida. Lower inventories, an "unplanned outage at the largest refinery in the U.S. and gasoline demand still slightly higher than last year’s levels have driven relative values of gasoline higher," he said.
Ultra-low-sulfur diesel rose for a second day, adding 3.96 cents, or 1.3 percent, to $2.9941 a gallon. Volume was 48 percent above the average.
ULSD’s premium over WTI widened 9 cents to $30.26 a barrel. The crack spread versus Brent increased 24 cents to $16.20.
Top Oil Stories: OTOP <GO> Oil Market Stories: NI OILMARKET <GO> Gasoline Stories: NI GASOLINE <GO>
--With assistance from Barbara Powell in Houston. Editors: David Marino, Charlotte Porter
To contact the reporter on this story: Christine Harvey in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Dan Stets at email@example.com