Crude-oil futures prices rose Thursday, driven by a surge in gasoline futures on worries of tightening supplies ahead of the peak demand season.
Traders also said a strong influx of commodity fund money pushed up reformulated gasoline blendstock futures prices as the market nervously braces for the seasonal switch from winter-grade fuel to summer-grade fuel.
Many refineries have units down for seasonal overhauls before the switch in fuel specifications and that is playing havoc with supply outlooks and triggering broad moves in nearby futures contracts.
Light, sweet crude oil for March delivery on the New York Mercantile Exchange rose 30 cents, to $97.31 a barrel, a two-week high. ICE April Brent crude rose 12 cents, to $118 a barrel, after the March contract expired Wednesday at $118.72 a barrel.
March-delivery reformulated gasoline blendstock futures settled up 8.12 cents, or 2.7%, at $3.1166 a gallon, the highest since Sept. 28. The price is up 15.2% from the front-month low for 2013 hit Jan. 15.
The front-month March RBOB futures contract, which expires in two weeks, is for the winter-grade fuel, while the April contract requires that gasoline meet the costlier, summer-grade standards. Gasoline formulas are adjusted seasonally under the Clean Air Act to reduce smog formation when the weather warms up.
April gasoline normally trades at premium of around 15 cents a gallon to March gasoline futures, but in recent days, the spread has blown out above 20 cents a gallon. That reflects worries that supplies may be tight at the start of spring-summer peak driving season. Refiners at this time of year have to strike a delicate balance of keeping enough winter-grade fuel on hand to meet demand before emptying tanks to refill them with summer-grade fuel.
"We always get the funds coming in during the pre-season bump in prices, but it seems like it's starting earlier," said Gene McGillian, analyst and broker at Tradition Energy. He said he had assumed that heavy refinery maintenance had already been factored into prices which have risen sharply in recent week.
Analysts noted the RBOB price gain is coming even as the supply picture appears to be improving. Gasoline stocks in the Northeast, which fell to 20% below five-year average levels in late November after disruptions caused by Hurricane Sandy, are now just 3.9% below their typical marks.
Tim Evans, energy futures specialist at Citi Futures, said, "We are up on anxiety about the future, not tightness in the present."
March heating oil futures settled 0.49 cent higher, at $3.2237 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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