Gasoline rose for a third day on expectations that US refineries will slow production to convert plants to make more heating oil, reducing motor fuel inventories that already are below year-ago levels.
Gasoline demand from wholesalers was up 6.3 percent this summer from last year, according to American Petroleum Institute figures, as motorists took to the highways for summer vacations.
Such motor-fuel use contributed to a 13 percent drop in gasoline inventories from a two-year high in late June.
"We are already at a deficit and with all of the work on refineries, one has to wonder where all the gas will come from," said Chris Schachte, an analyst at GSC Energy Corp. in Atlanta.
Gasoline for October delivery rose US$0.175, or 2.2 percent, to US$0.8254 a gallon on the New York Mercantile Exchange. Futures, which represent wholesale prices, gained 2.5 percent this week and were down 18 percent from a year ago.
"Futures prices are a valid indicator of where retail prices are headed," said Tim Evans, senior energy analyst at IFR Pegasus in New York. "We should see retail prices rising in the next couple weeks even if this rally stalls."
The average price paid by US motorists for regular gasoline fell US$0.02 to US$1.541 a gallon on Friday, the American Automobile Association said today on its Web site. Prices are down from a record US$1.718 a gallon reached on May 14, though they're up US$0.15 from a month ago.
"Retail prices often go up when a retailer's tank gets low and he orders a delivery," Evans said. ``When the retailer sees his invoice, the price on the signs will be adjusted to reflect his costs.'' Motiva Enterprises LLC will shut a unit at its Port Arthur, Texas, refinery for one to two months starting Oct. 4 and Valero Energy Corp. will close a unit at its Corpus Christi, Texas, refinery on Oct. 1 for three weeks, both for maintenance projects, traders said. Neither company would confirm the schedules.
US gasoline production fell 2.7 percent last week to 7.94 million barrels a day, the lowest level since March 30, according to the API. Inventories fell 1.88 million barrels to 194.4 million. Supplies were down 2.5 percent from the year before. Refineries usually choose the spring or fall for maintenance programs.
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