Reuters: Financial Services and Real Estate: US gasoline ends April down, first time since RBOB launch

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US gasoline ends April down, first time since RBOB launch Apr 30th 2012, 22:55 By Gene Ramos NEW YORK, April 30 | Mon Apr 30, 2012 6:55pm EDT NEW YORK, April 30 (Reuters) - U.S. gasoline futures finished lower for the month of April, the first losses for the month since the New York Mercantile Exchange launched the motor fuel contract in late 2005, as concerns about a supply shortfall eased. Gasoline futures usually rise in April as the fuel market gears up for the summer driving season that traditionally begins with the Memorial Day weekend. But prices so far this year have seen their peak in March, when the threatened loss of three refineries on the East Coast spurred concerns about a gasoline shortfall in the region. Since then, news of deals that could save two of those plants have weighed on prices. "Prices appeared to have peaked a month earlier than usual this year, and with the price of crude oil stuck just above $100 a barrel gasoline demand must leap for futures to hit new highs for the year," said Gene McGillian, energy analyst at Tradition Energy in Stamford, Connecticut. Gasoline demand -- dragged down by high prices and the struggling economy -- has continued to fall in recent weeks from last year's level, tracked at a four-week average of 4.2 percent lower in the week to April 20 when the Energy Information Administration issued its latest weekly inventory report. Demand has dropped even though physical stockpiles fell for the 10th straight week, declining 20.5 million barrels, or 8.8 percent, during the period, EIA data showed. NYMEX RBOB gasoline for May delivery expired on Monday at $3.1844 a gallon, dropping more than 2 cents on the day and accumulating a loss of 20.55 cents, or 6.1 percent, for the month. The new front-month contract, June, ended far below that at $3.1246, down 1.99 cents on the day, as the gasoline market remained in backwardation, a situation in which prices of gasoline contracts further out are cheaper which suggests demand could be lower moving forward. Gasoline futures on March 29 hit $3.4455, their highest since prices peaked at $3.48 on April 29 last year. The drop coincided with talk that two East Coast refineries, which had seen high crude costs batter margins, will not be shuttered. Delta Air Lines announced a much-awaited deal on Monday in which it will buy one of those refineries, ConocoPhillips' 185,000 barrel-per-day Trainer, Pennsylvania, plant, for $150 million. It is the first purchase of an oil refinery by an airline. Last week, Sunoco Inc said it was in exclusive talks with private equity firm Carlyle Group LP for a potential joint venture to run the 335,000 bpd refinery in Philadelphia, the biggest on the East Coast. Gasoline futures have also been affected by increasing gasoline imports arriving at the U.S. New York Harbor, the delivery point for NYMEX-traded gasoline futures. The imports are coming from Europe and Canada. Gasoline futures have fallen sharply in recent weeks amid weak demand due to a high jobless rate and a wobbly economic recovery, PROFITABILITY ISSUE As futures prices erode, refiners are trying to cope with a low profitability environment. Monday's gasoline crack spread -- the profits refiners make when processing crude into the fuel -- dropped to an 11-week low of $25.49 a barrel, the lowest since Feb. 17. "Short of a major surprise in Wednesday's EIA stats such as a draw of more than 2 million barrels in gasoline supply, we will look for further contraction in the gas cracks," said Jim Ritterbusch, an independent analyst based in Galena, Illinois. Ahead of the weekly industry and government inventory reports, U.S. gasoline stockpiles were forecast to have fallen by just 300,000 barrels on average in the week to April 27, according to a preliminary Reuters poll. The average actual weekly decline from the week to Feb. 17 to April 20 was 2.1 million barrels. Link this Share this Digg this Email Reprints

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