The Wall Street Journal-20080119-Gasoline Futures Post Gains As Refiners Reduce Output
Return to: The_Wall_Street_Journal-20080119
Gasoline Futures Post Gains As Refiners Reduce Output
Benchmark gasoline futures rose Friday as refiners curtailed output due to weak profits, belying concerns about the prospects for fuel demand.
Reformulated-gasoline blendstock for February delivery settled 3.66 cents, or 1.6%, higher at $2.3034 a gallon on the New York Mercantile Exchange, outpacing a modest increase in crude-oil futures.
Due to ample supplies and tepid demand, refiners have been unable to fully pass on the skyrocketing cost of crude oil. While the price of gasoline has been rising at the pump, those increases have so far been modest in comparison to the rise in oil prices, which earlier in January hit an all-time peak above $100 a barrel. Refining margins, the difference between the price of the crude oil refiners buy and the price of the products they sell, have been depressed.
Nymex crude for February delivery on Friday settled 44 cents, or 0.5%, higher at $90.57 a barrel.
In a bid to save their bottom lines, companies operating refineries, like Tesoro Corp., are reducing their output. By reducing oil-product output, refiners are lowering the available supply of gasoline and diesel fuel, driving prices up.
Other refinery operators have scaled back production for work: Marathon Oil Corp. is among thoseperforming maintenance on Gulf Coast refineries, where margins have been weak.
U.S. refinery usage last week fell the most since Hurricane Katrina, which knocked out operations at several plants in 2005.
In other commodity markets:
GOLD: Futures posted modest gains to overcome a weaker start after traders bought back previously sold positions near the session's end. Nearby January gold futures on the Comex division of the Nymex settled up $1.30 to $880.8 an ounce.
SUGAR: Prices fell after producer selling and profit-taking trumped earlier fund purchases and the buying back of previously sold positions. March sugar fell 46 points to 11.99 cents a pound.
