U.S. gasoline futures slip even as crude bounces after China plunge

(Updates prices to settlement, adds byline)

By Robert Gibbons

NEW YORK, Aug 25 (Reuters) - U.S (Other OTC: UBGXF - news) . gasoline futures fell on Tuesday, pressured by a Midwest refinery unit return and the approaching end of the summer driving season even as crude futures rallied from 6-1/2-year lows.

The oil futures complex was hammered on Monday when plunging equities in China sparked a global selloff of shares and commodities.

Front-month September RBOB gasoline fell 3.24 cents, or 2.2 percent, to settle at $1.4386 a gallon, after falling to a session low of $1.4313 from a $1.4942 peak.

U.S. crude and distillate futures pushed higher.

BP Plc confirmed on Tuesday that it restarted a large crude distillation unit that was shut on Aug. 8 for unscheduled repairs at its 413,500-barrel-per-day Whiting, Indiana, refinery, the largest in the region.

News (Other OTC: NWSAL - news) late last week that BP's unit would not be shut a month or more as expected weakened the cash gasoline differentials to benchmark futures in the Chicago and Group Three wholesale markets in the Midwest.

Chicago gasoline differentials slid from a 54-cent premium to September futures to finish the week even to the benchmark.

"As the refinery problems clear, the low feedstock cost of crude oil is going to slowly but surely eradicate the scarcity premium that arose," said John Kilduff, partner at Again Capital LLC.

Also curbing any bounce for gasoline futures on Tuesday was some selling to shift into ultra-low-sulfur diesel (ULSD) futures, the benchmark heating fuel futures, as the U.S. harvest and winter fuel season approaches.

But with Labor Day holiday weekend travel still on tap the first weekend in September and the recent strength of U.S. gasoline demand, some analysts do not rule out some strengthening of gasoline.

On a four-week average, gasoline demand has been running more than 6 percent above the year-ago period, according to data from the Energy Information Administration, while overall distillate demand has lagged the year-ago period more than 3 percent.

"With refinery activity in the Gulf Coast region still running hot at almost 97 percent of capacity, the odds of a significant glitch tend to increase and the probability of extended or more extensive seasonal refinery maintenance is upped," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.

He expects gasoline futures to remain "highly sensitive to any additional reports of refinery issues." (Reporting by Robert Gibbons; Editing by Alan Crosby and Leslie Adler)