(Updates throughout, adds comments, prices, milestones)
By Jarrett Renshaw and Devika Krishna Kumar
NEW YORK, May 25 (Reuters) - U.S. gasoline retailers stocked up on fuel sold in New York Harbor Thursday ahead of the Memorial Day holiday weekend, traders said, marking a bullish start for the critical summer driving season.
The buying spree sent U.S. New York Harbor cash gasoline prices above the benchmark futures contract Thursday morning for the first time in roughly six months, traders said.
But the boost in pricing may be short lived. U.S. refiners are running plants at or near record levels, raising the possibility that gasoline inventories will spike again, hurting margins this summer.
A lack of product coming into New York harbor from Europe tightened inventories, said Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut. "And it's Memorial Day, so one would think there would be a little spike on seasonal demand," said Lebow.
Total motor gasoline imports into PADD 1, or the East Coast fell to 612,000 barrels per day (bpd) last week from 638,000 bpd a week earlier, according to U.S. Energy Information Administration data.
F2 RBOB gasoline RBOB-DIFF-NYH in the New York Harbor strengthened to trade about 0.30 cent per gallon higher than the benchmark futures contract on the New York Mercantile Exchange, traders said. That is the first time cash prices have traded above the futures prices since at least early January.
Cash gasoline barrels are selling ahead of the long holiday weekend, when a record number of motorists are expected to hit U.S. roads and highways. Driving demand peaks in the United States in the summer. One trader said the activity relates to "end users buying in style ahead of the long weekend."
M2 conventional gasoline also strengthened, trading about 3.50 cents per gallon under futures.
U.S. gasoline futures outperformed crude on Thursday, rising as much as 1 percent to $1.6695 per gallon before trading 2.3 percent lower, dragged down by crude, which fell after OPEC extended supply cuts, but less than some had hoped.
The gasoline crack spread RBc1-CLc1, a key measure of margins, rose to $18.36 a barrel, up 2.9 percent.
U.S. gasoline demand hit a nine-month high last week, according to preliminary EIA numbers released on Wednesday. Most analysts are predicting that U.S. gasoline consumption will modestly exceed last year's record rate.
The U.S. gasoline market accounts for roughly 10 percent of global oil consumption.
U.S. refiners processed 17.281 million barrels of crude oil last week, just shy of the record 17.285 million barrels processed in late April, according to EIA data released Wednesday.
The historic refinery runs are being supported by strong demand from Mexico and South America. Once expected to return to normal levels this summer, U.S. gasoline inventories should remain higher until year's end, Barclays said in a note Wednesday.
"It could lead to a surplus and either export demand or domestic demand will need to be very strong to suck up that added volume," Lebow said.
Reporting by Jarrett Renshaw and Devika Krishna Kumar; Editing by Frances Kerry and Lisa Shumaker