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Gasoline Slides on Concern the U.S. Economic Recovery Slowing

Gasoline slid to a four-month low, capping the largest monthly loss since September, as jobless claims rose and the U.S. economy grew more slowly in the first quarter than previously estimated.

Futures sank as first-quarter gross domestic product grew at a 1.9 percent annual rate, down from a prior estimate of 2.2 percent prior estimate, Commerce Department figures showed. First-time jobless claims rose by 10,000 to 383,000 last week, the Labor Department said.

“It seems the economic headlines are clearly not impressing the market as growth continues to be slow,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for June delivery fell 3.32 cents, or 1.2 percent, to $2.825 a gallon on the New York Mercantile Exchange, the lowest settlement since Jan. 24. Futures dropped 11 percent in May, trimming the year’s gain to 5.2 percent.

The more actively traded July contract fell 5.12 cents, or 1.9 percent, to $2.7227 a gallon. June gasoline and heating oil contracts expired at the close of floor trading today.

The Energy Department reported today that gasoline supplies slipped 833,000 barrels last week to 200.2 million, the lowest level since November 2008. Stockpiles have shrunk 14 percent in 15 straight weeks of declines.

Gasoline Demand

Gasoline demand, measured by deliveries to wholesalers, rose 3.5 percent to 8.93 million barrels a day as Americans filled their tanks before the Memorial Day holiday weekend. Demand over the past four weeks was 2.6 percent lower than a year earlier. Total product demand fell 1.9 percent last week to 18.3 million barrels a day, the lowest level in eight weeks.

“Demand is far below what we’d expect this year,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Business activity in the U.S. expanded in May at the slowest pace in more than two years as orders and production cooled. The Institute for Supply Management-Chicago Inc. said today its barometer decreased to 52.7, the lowest since September 2009, from 56.2 in April. Readings greater than 50 signal growth.

Companies in the U.S. added 133,000 workers in May, followed a revised 113,000 gain the prior month that was smaller than initially estimated, Roseland, New Jersey-based ADP Employer Services said today.

“The ISM number is really disappointing and the ADP jobs number is raising concerns the U.S. is falling down,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

Heating Oil Declines

June-delivery heating oil fell 3.36 cents, or 1.2 percent, to $2.7062 a gallon, the lowest settlement in 15 months. Prices tumbled 15 percent in May. The more actively traded July contract declined 4.06 cents to $2.7032.

Inventories of distillates, including diesel and heating oil, fell 1.71 million barrels, or 1.4 percent, to 117.8 million, the lowest level since June 2008. Wholesale demand for distillates rose 7 percent to 3.86 million barrels a day last week, according to department data. Consumption over the past four weeks was 1 percent below a year earlier.

Regular gasoline at the pump, averaged nationwide, fell 0.6 cent to $3.62 a gallon yesterday, according to AAA. It was the lowest level since Feb. 22. Gasoline is down 8 percent since reaching a 2012 high of $3.936 on April 4.

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

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