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Gasoline Futures Prices Down; Crude Mixed

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Gasoline futures prices ended at their lowest in more than a month Tuesday, amid expectations for an increase in gasoline production, as refiners return from seasonal maintenance.

Reformulated gasoline blendstock for May delivery settled 6.07 cents, or 2%, lower at $3.0408 a gallon, the lowest finish for the front-month contract since Feb. 25.

Analysts and traders say they expect a seasonal pick-up in refining activity in the coming months, boosting production of the motor fuel. Gasoline prices at the pump have fallen more than 11 cents over the last month to an average of $3.751 a gallon, according to AAA, which the automobile association has attributed to rising supply as refineries end seasonal maintenance shutdowns.

Refiners typically pull back on output for maintenance during the winter months. Then they begin ramping up their output in the spring in anticipation of higher demand during the summer driving season and to meet needs for summer-grade gasoline.

Demand, however, has been persistently weak in the U.S., as high unemployment keeps drivers off the road and new cars become increasingly more fuel efficient, raising worries that supply will outstrip fuel needs. "It's down compared with historical averages," said Brian Milne, refined fuels editor at Telvent DTN. "Then there's this anticipation that there's going to be more supply coming, as more refiners come on from maintenance."

Data from the Energy Information Administration indicate refiners have boosted crude oil processing rates by more than 6%, or nearly 900,000 barrels a day, increasing gasoline output in recent weeks.

The EIA's closely watched weekly survey on oil inventories and refinery utilization is due at 10:30 a.m. EDT (1430 GMT) Wednesday. Refiners are expected to have boosted capacity utilization by 0.3 percentage point to 86% last week, according to a survey by Dow Jones Newswires.

Oil futures, meanwhile, were mixed Tuesday. Light, sweet crude for May delivery settled 12 cents, or 0.1%, higher at $97.19 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently fell 64 cents, or 0.6%, to $110.44 a barrel.

The shutdown of Exxon Mobil Corp.'s Pegasus pipeline remained a driver of market activity. The 95,000-barrel-a-day pipeline brings Canadian crude oil from Patoka, Ill., to Nederland, Texas. Its closure following a spill in Arkansas has raised expectations for further increases in U.S. oil inventories, particularly in the mid continent.

Analysts expect oil stockpiles last week rose 1.5 million barrels. Gasoline stockpiles were seen falling 500,000 barrels, while inventories of distillates, including heating oil and diesel, are projected to have declined 1.1 million barrels.

The American Petroleum Institute, an industry group, said its own survey released late Tuesday showed oil stocks rose 4.7 million barrels last week. Gasoline stocks dropped 5 million barrels. Distillate inventories fell 1.9 million barrels, while refinery runs rose 0.9 percentage point to 85.6% of capacity.

May heating oil settled 1.87 cents, or 0.6%, higher to $3.0874 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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