By Barbara Powell Sept. 16 (Bloomberg) -- Gasoline rose the most in almost seven weeks as factory output climbed more than forecast in August and the dollar weakened, increasing the appeal of commodities as an investment. Futures followed equities higher after the Federal Reserve reported that U.S. industrial production climbed 0.8 percent last month after a 1 percent gain in July. The dollar fell as low as $1.4737 per euro, the weakest level since Sept. 25, 2008. “The economic sentiment of things getting better is underpinning the market today,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “And if the recession is over, commodities will feel the benefit of that.” Gasoline for October delivery rose 5.91 cents, or 3.3 percent, to settle at $1.8483 a gallon at 2:43 p.m. on the New York Mercantile Exchange. It was the largest percentage gain since July 30. The Standard & Poor’s 500 Index increased 1.5 percent to 1,067.96 at 3:47 p.m. in New York. Gasoline also gained as crude oil for October delivery rose above $72 after the U.S. Energy Department reported that oil stockpiles fell to the lowest level since January. Gasoline has jumped 6 percent in the first two-day rally since August on signals that the U.S. recession is easing and fuel demand will improve. Commerce Department The Commerce Department yesterday reported that U.S. retail sales jumped 2.7 percent in August, the most in three years. Federal Reserve Chairman Ben S. Bernanke, while speaking at the Brookings Institution in Washington yesterday, said the U.S. recession “very likely” has ended. Prices dropped earlier after the Energy Department reported that gasoline and distillate supplies increased and demand fell last week. Motor-fuel inventories in the week ended Sept. 11 rose 547,000 barrels, or 0.3 percent, to 207.7 million, the department said. Demand, based on what blenders and refiners supply to the wholesale market, dropped 3 percent to the lowest level in five weeks. “You’d like to see one last big draw in gasoline this year, but given the way things have gone this summer, that was something that was probably not going to happen,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. Gasoline Supplies Gasoline supplies last week were 7.2 percent above revised figures from a year earlier, when refiners along the U.S. Gulf Coast in August and September 2008 lost about 20 percent of daily production capacity due to hurricanes Ike and Gustav. Over the past four weeks, demand averaged 9.22 million barrels a day, up 3.5 percent from the same period last year. “Gasoline use was down 8 percent in September 2008 and total demand was down 12.5 percent,” Pursell said. “You will see positive comps as you roll through September.” The premium of gasoline over crude oil, or the crack spread, rose as imports and production fell. The spread, based on the October futures contracts, added about 89 cents, to $5.11 a barrel at 3:30 p.m. in New York. Earlier, the spread touched $3.56, the lowest intraday level since Jan. 27. Gasoline imports fell 29 percent from the prior week to an average of 701,000 barrels a day, the lowest since the week ended Nov. 7, 2008. Refinery Utilization Refineries operated at 86.9 percent of their capacity, down 0.3 percentage points from the week before and the lowest in three weeks. Gasoline production fell 2.3 percent from the prior week. Supplies of distillates, including heating oil and diesel, rose 1.4 percent to 2.2 million barrels to 167.7 million, the highest since the week ended Jan. 14, 1983. The four-week average demand for distillate was 6.8 percent lower than the same period in 2008. October-delivery heating oil gained 4.57 cents, or 2.6 percent, to settle at $1.8258 a gallon. Prices have risen for three days, the longest rally since a four-day surge that ended Aug. 5. Regular gasoline at the pump, averaged nationwide, fell 0.7 cent yesterday to $2.556 a gallon, AAA, the nation’s biggest motoring organization, said today on its Web site.

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