Gasoline fell more than 2 percent, the fourth drop this week, on speculation that US wholesalers are well supplied for the Memorial Day holiday and the first weeks of June, when demand grows toward an annual peak.
An increase in gasoline inventories last week to 199.9 million barrels left them less than 1 percent below year-earlier levels, according to the American Petroleum Institute, narrower than a 5 percent shortfall in March. Prices rallied 23 percent in April on concern inventories would stay low this summer.
"Everyone has what they need for June," said Justin Fohsz, a broker at Starsupply Petroleum Inc in Englewood, New Jersey.
"In the big scheme of things, this is not a huge move because prices are still very high." Gasoline for June delivery fell US$0.24, or 2.2 percent, to US$1.0501 a gallon on the New York Mercantile Exchange. Prices are down 3.2 percent this week, though they're still up 12 percent from a year ago. Futures represent wholesale prices.
The average U.S. pump price for regular gasoline rose to US$1.707 a gallon yesterday, the third record this week, the American Automobile Association said on its Web site yesterday.
Average prices in Chicago and San Francisco were above US$2 a gallon and the price in New York was a record US$1.854 a gallon.
Gasoline traders are sensitive to supply disruptions, especially in regions that use the cleaner-burning reformulated fuel blend. Supplies of reformulated gasoline, or RFG, rose 797,000 barrels to 39.8 million, leaving them 7.6 percent lower than a year earlier, the API said. That was wider than the deficit of 3 percent in the API's previous weekly report.
"The Upper Midwest and the West Coast are the regions that will be most sensitive," said George Gaspar, managing director of petroleum research at Robert W. Baird & Co in Milwaukee. "Our problem is that we are an RFG area, while only about 30 percent of the nation's gasoline is that grade." On Wednesday, speculation that a gasoline-making unit at the Sunoco Inc. Point Breeze refinery in Philadelphia would close Saturday for unplanned maintenance helped boost gasoline prices during their one increase this week. The company declined to comment.
"We can't afford to have any unscheduled refinery problems" because there's not much excess refining capacity, Gaspar said.
"Prices will be real sensitive, particularly after mid-June, when we are in the midst of the summer driving season." Crude oil was little changed after the International Energy Agency lowered its forecast for growth in world demand for the sixth straight month, citing high prices at a time of slowing world economies.
Daily oil use this year will rise 1.02 million barrels, or 1.4 percent, to 76.54 million, the Paris-based IEA said. That's 160,000 fewer than estimated last month. While growth was slowing, OPEC last month pumped 700,000 barrels daily above its self- assigned quota, the report said.
"At the same time demand is slowing, OPEC is producing more than they agreed to, so supplies shouldn't be a problem," said Chester Irvin, a trader at ABN Amro Inc. in New York.
Crude oil for June delivery rose US$0.03 to US$28.55 a barrel on the Nymex. Prices, which were little changed this week, have gained 6.5 percent this year and are up 58 percent over the past two years.
In London, Brent crude oil for June settlement fell US$0.29 , or 1 percent, to US$28.19 a barrel on the International Petroleum Exchange, unchanged from the close last Friday.
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