Gasoline Falls on Concern Higher Pump Prices Will Lower Demand
Gasoline fell to the lowest level in a week as prices at the pump reached a 31-month high, increasing concern that rising fuel costs will slow the U.S. economic recovery and reduce demand for motor fuel.
Futures slipped a second consecutive day as regular retail gasoline rose 0.2 cent to $3.835 a gallon yesterday, AAA said on its website. Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday that he expects a “soft” first quarter in the U.S. because of the impact of rising gasoline prices on consumer spending.
“The market is showing sensitivity to the economic outlook again,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We have gas prices above $4 in some areas. Elevated price levels will reduce fuel demand.”
Gasoline for May delivery dropped 1.97 cents, or 0.6 percent, to settle at $3.2331 a gallon on the New York Mercantile Exchange.
Futures touched a low of $3.1979 before paring losses as equities rebounded and the dollar retreated.
The Standard & Poor’s 500 Index rose 0.4 percent as of 3:06 p.m. in New York as companies from Johnson & Johnson to Burberry Group Plc. reported earnings that beat expectations. The euro gained 0.7 percent against the U.S. currency on speculation the European Central Bank will raise rates, increasing the investment appeal of dollar-denominated commodities.
“The stock market is positive now, the dollar is on the lows, there’s little volume and the market was probably oversold on yesterday’s” Standard & Poor’s Ratings Services reducing its outlook on the U.S.’s long-term sovereign credit rating, said Ray Carbone, president of Paramount Options Inc. in New York.
Negative Outlook
Prices fell yesterday after Standard & Poor’s Ratings Services revised its outlook on the U.S.’s long-term sovereign credit rating to negative from stable, and Saudi Arabia’s Oil Minister Ali al-Naimi said that the “market is oversupplied.”
U.S. gasoline supplies probably shrank 1.5 million barrels last week, according to the median estimate of 13 analysts in a survey by Bloomberg News.
The Energy Department is scheduled to report on oil inventories for the week ended April 15 at 10:30 a.m. tomorrow in Washington.
Gasoline stockpiles sank 7 million barrels in the week ended April 8, according to department data, as refiners cut rates, imports slipped 17 percent and demand jumped to a five- week high.
Refinery Rates
Refinery utilization probably increased 0.9 percentage point last week to 82.3 percent, according to the survey.
“Prices are extremely overextended, and this week’s report is likely to show an increase in utilization,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. Beutel, who participated in the survey, estimates refinery rates increased 0.8 percentage point.
Heating oil for May delivery declined 2.43 cents, or 0.8 percent, to settle at $3.1585 a gallon on the exchange.
Inventories of distillates, including heating oil and diesel, rose 300,000 barrels, according to the survey. Stockpiles in the week ended April 8 dropped 2.68 million barrels to 150.8 million, the lowest level in almost a year, according to department data.
To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
Rate this Page