Gasoline Rises to Seven-Month High as Iran Tension Grows
Gasoline rose to the highest level since July after Iran denied nuclear inspectors access to a military base, adding to concern that global oil supply will be disrupted, and on a report that demand increased.
Futures advanced for the fourth time in five days as Iran prevented International Atomic Energy Agency officials from visiting the Parchin base during two days of talks that ended yesterday. MasterCard Inc. (MA) said U.S. gasoline consumption rose 3.4 percent last week to 8.28 million barrels a day.
“The market was confirming what we had already expected, that those talks were going nowhere,” Phil Flynn, vice president of research at PFGBest in Chicago, said by phone. “If the Iranians are going to continue along this path, we know this path is going to lead to a conflict.”
March-delivery gasoline rose 1.75 cents, or 0.6 percent, to settle at $3.0877 a gallon on the New York Mercantile Exchange. The settlement was the highest price since July 29. Gasoline has gained 15 percent in 2012.
After the inspectors were refused permission to visit the base, Iran’s ambassador to the IAEA, Ali Asghar Soltanieh, told state television that officials discussed grounds for cooperation and further talks will be held. Iran is OPEC’s second-largest producer, behind Saudi Arabia.
MasterCard’s weekly SpendingPulse report showed demand increased from the lowest level since it began collecting the data in 2004. Demand was 6.4 percent below a year earlier.
Rising Tension
Speculation that oil supplies will be disrupted has increased as tension escalates between Iran and Western nations, David Greely, head of energy research at Goldman Sachs Group Inc. in New York, said in a report today. The bank maintained a recommendation that investors buy Brent contracts for July 2012 to take advantage of rising prices.
Gasoline has gained twice as fast this year as crude oil, which settled at the highest level in nine months. Crude is up 7.5 percent in 2012.
“The price of crude oil is the biggest factor behind rising gasoline prices because it is the biggest cost component in making gasoline,” John Felmy, chief economist of the Washington-based American Petroleum Institute, said on a conference call with reporters. “Demand for crude is increasing as the economies around the world begin to recover and the world’s excess oil capacity is shrinking.”
Regular gasoline at the pump, averaged nationwide, rose 0.9 cent to a five-month high of $3.579 a gallon yesterday, according to AAA data.
Heating oil for March delivery gained 3.31 cents, or 1 percent, to $3.2724 a gallon on the exchange, the highest settlement since April 8.
To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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