Enter multiple symbols separated by commas

Gasoline Rallies to 7-Month High; Oil Trades Mixed Ahead of Expiration

Gasoline futures struck a seven-month high on Monday amid worries over falling stockpiles and slow fuel production in the world's biggest energy consumer.

The rally pushed benchmark crude oil prices moderately higher as dealers shifted their focus from the waning winter heating season to looming peak summer driving demand, which
traditionally kicks in at the end of May.

U.S. gasoline futures on the New York Mercantile Exchange gained 5.10 cents, or 2.7%, to $1.9581 a gallon after rising as high as $1.9740, the highest level since August 2006.

"Barring some very bearish economic data from the U.S., oil prices should recover in the coming weeks on falling U.S. gasoline stocks amid the driving season," said Gerard Burg, analyst at National Australia Bank.

U.S. crude oil for May delivery, the most actively traded contract, settled up 12 cents to $59.70 a barrel, though the expiring April contract was down 52 cents to $56.59.

The rise followed a drop in prices last week after troubles in the U.S. housing sector sparked concern about economic growth. U.S. crude fell as low as $56.17 on Friday, the lowest level since the end of January.

U.S. gasoline inventories have fallen about 6% since early February, and are expected to fall further, as maintenance and mechanical troubles cut refinery production levels by nearly 15%.

A survey of analysts on Monday showed expectations that the next government report on U.S. petroleum supplies would show gasoline stocks down another 1.8 million barrels, alongside a 1.2 million barrel increase in crude supply.

Helping the gasoline rally was news that BP shut a unit at its 260,000 barrels per day Los Angeles-area refinery in Carson, California, on Friday.

Oil shrugged off China's move at the weekend to raise interest rates, which earlier on Monday led to price falls in some commodities, such as copper. China is the world's second-largest oil consumer.

"This is a pretty clear signal that Chinese authorities think that growth is a bit too fast," said Tony Dolphin, director of economics and strategy at Henderson Global Investors. "The flip side of that is this is a pretty minor tightening of policy."

The Organization of the Petroleum Exporting Countries, which agreed last week to keep supply curbs of 1.7 million bpd in place, is keeping a close watch on the global economy.

Should prices fall sharply, the group that pumps more than a third of the world's oil would hold a special meeting. The next scheduled OPEC gathering is in September.

"If oil prices in international markets go down, certainly OPEC will make new decisions by holding an emergency meeting," Iranian Oil Minister Kazem Vaziri-Hamaneh said on Saturday. He did not give a specific price level.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • Hero miles for military members: Real estate magnate's plea

    Chairman of the Fisher House Foundation, Ken Fisher, discusses the Hero Miles program with CNBC's Dina Gusovsky. During Military Appreciation Month, Fisher is asking every traveler to donate 1,000 of their miles to replenish the Hero Miles programs that is in danger of running out.

  • Cramer shuts down this market's haters

    "Mad Money" host Jim Cramer on why this market can't stop, won't stop.

  • From the battlefield to the boardroom

    Your Grateful Nation is dedicated to helping Special Forces veterans enter the corporate world and Knot Standard provides complimentary suits to vets. Mad Money's Jim Cramer spoke with Rob Clapper, Your Grateful executive director; John Ballay, Knot Standard co-founder and president; Tej Gill, retired U.S. Navy Seal; and Darren McB, active duty U.S. Navy Seal.