Gasoline Futures Decline as Crude Slides on Syria Weapons Talks

Gasoline declined as crude fell after the U.S. and Russia began talks about Syria’s chemical weapons and amid speculation that the Federal Reserve will begin this month to reduce its efforts to stimulate the economy.

Futures headed for their second consecutive weekly loss. Crude fell as U.S. Secretary of State John Kerry reported a “constructive” start to the talks, while giving no sign of a breakthrough. The Fed’s Open Market Committee is forecast to announce the timing for some tapering of bond purchases when it meets next week. Crack spreads widened.

“We’re in that twilight zone between war and peace and the market will swing on headlines today,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Add to that the uncertainty about tapering. There’s a lot of nervousness going long or short into the weekend.”

Gasoline for October delivery fell 0.9 cent to $2.7537 a gallon at 10:08 a.m. on the New York Mercantile Exchange, after swinging between a high of $2.7798 and a low of $2.748. Trading volume was 9.9 percent below the 100-day average. Prices have dropped 3.5 percent this week.

President Barack Obama delayed a possible U.S. military intervention twice: first, on Aug. 31, to consult Congress, then on Sept. 10 to take up Russia’s proposal for international oversight of Syria’s chemicals arsenal.

“The market continues to swing back and forth on uncertainty over what’s going to play out in the Middle East and the outcome of the FOMC meeting,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline Premium

Gasoline’s premium over crude increased for a second day as refineries shut units for planned seasonal maintenance, reducing supplies.

The motor fuel’s crack spread versus West Texas Intermediate crude widened 64 cents to $8.07 a barrel while the fuel’s premium over Brent rose 46 cents to $3.86.

Pump prices, averaged nationwide, fell 0.1 cent to $3.54 a gallon, 32.9 cents below a year ago, Heathrow, Florida-based AAA said today on its website.

Ultra-low-sulfur diesel for October delivery fell 1.54 cents, or 0.5 percent, to $3.101 a gallon, 29 percent below the 100-day average.

ULSD’s crack spread versus WTI widened 29 cents to $22.58 a barrel while the premium over Brent rose 11 cents to $18.37.

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

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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