Gasoline Futures Slip on Speculation Demand Won’t Improve

Gasoline futures fell the most in two weeks on speculation that demand for the motor fuel won’t improve as consumption has failed to keep pace with 2010 levels.

Futures declined for the first time in seven sessions as consumption in the four weeks ended Dec. 16, measured by deliveries to wholesalers, was 4.7 percent below a year earlier, Energy Department data show. Retail gasoline use through Dec. 23 was down 1.6 percent from 2010, according to MasterCard Inc. (MA)’s SpendingPulse report today.

“There’s continued decline in gasoline demand in a year- on-year comparison,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for January delivery fell 4.1 cents, or 1.5 percent, to $2.6478 a gallon at 2:13 p.m. on the New York Mercantile Exchange, after touching a low of $2.6388. Prices are up 7.9 percent this year, after rising as much as 41 percent through April 29.

Fuel use dropped below the year-earlier level for the 17th consecutive time last week, slipping 1.6 percent, according to the SpendingPulse report.

Demand may grow 0.2 percent next year after dropping 2.6 percent to a 10-year low in 2011, the department said in its Short-Term Energy Outlook Dec. 6.

Gasoline also weakened after the European Central Bank’s sheet soared to a record after increasing loans to keep credit flowing during the region’s debt crisis. The dollar gained 1 percent against the euro at 2:16 p.m. in New York, weakening the investment appeal of commodities.

Euro Weakness

“The market is reacting to the weakness in the euro,” said Phil Flynn, vice president of research at PFGBest in Chicago. “That balance report did shake us up a bit. And there’s no expectation gasoline demand is going to be strong.”

The Energy Department is scheduled to report last week’s inventories tomorrow. The report will probably show that distillate stockpiles fell 650,000 barrels, the first decline in four weeks, according to the median estimate of eight analysts in a survey by Bloomberg News.

“We’ve got three months of winter ahead of us and people are expecting another draw in inventories last week,” Lipow said.

Supplies of gasoline decreased 1.2 million barrels, according to the survey.

The industry-funded American Petroleum Institute is scheduled to report last week’s inventories at 4:30 p.m. today in New York.

January-delivery heating oil declined 0.68 cent to $2.9017 a gallon. Prices are heading for a 14 percent gain in 2011.

Regular gasoline at the pump, averaged nationwide, rose 1.2 cents to $3.243 a gallon yesterday, according to AAA data. Prices were 6.4 percent above a year earlier.

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

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