Gasoline Tumbles as U.S. Government Poised for Partial Shutdown

Gasoline slid, capping a second quarterly decline, as the government was poised for its first partial shutdown in 17 years, threatening the economic recovery and fuel demand.

Futures tumbled 13 percent in September, the worst-performing contract in the Standard & Poor’s GSCI commodity index. The deadline neared for the U.S. Congress to pass a stopgap spending bill before the country’s fiscal year ends at midnight.

“You’ve got a market that has been up on stimulus and the expectation that the economy is getting a little bit better and now the demand side looks questionable,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “When government is shut down, we obviously take a hit on the gross domestic product.”

Gasoline for October delivery fell 4.15 cents, or 1.6 percent, to $2.6347 a gallon on the New York Mercantile Exchange. Trading volume was 19 percent below the 100-day average at 4:26 p.m. Prices are down 6.3 percent this year and 4.3 percent in the third quarter.

The latest plan from the House of Representatives would authorize 10 weeks of spending only if much of President Barack Obama’s health-care law is delayed for a year, a measure opposed by the Democrat-controlled Senate.

Concern that a government shutdown would stifle economic growth sent the Standard & Poor’s 500 Index down 0.6 percent to 1,681.55. The S&P GSCI (SPGSCI) commodities index dropped 0.6 percent.

Supplies Increase

Gasoline supplies increased in the week ended Sept. 20 to a three-year seasonal high, according to Energy Information Administration data. Refinery utilization, at 90.3 percent, was was the most for this time of year since 2004.

“Gasoline is leading the market down due to the significant inventory overhang that we have and the likelihood refiners continue to operate at higher run rates than last year,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

The October gasoline and ultra-low-sulfur diesel contracts expired at the close of floor trading. The more actively traded November gasoline contract fell 3.2 cents, or 1.2 percent, to $2.6282 a gallon.

The motor fuel’s crack spread versus West Texas Intermediate crude narrowed 80 cents to $8.05 a barrel, down from $13.73 on Aug. 30. The fuel’s premium over Brent fell $1.08 to $2.01.

Pump Prices

Pump prices, averaged nationwide, fell 0.6 cent to $3.399 a gallon, the lowest level since Jan. 29 and 38.4 cents below a year ago, Heathrow, Florida-based AAA said today on its website.

Ultra-low-sulfur diesel for October delivery fell 1.91 cents, or 0.6 percent, to $2.971 a gallon on trading volume that was 8.7 percent below the 100-day average. Futures slipped 5.4 percent this month while gaining 3.2 percent in the third quarter. ULSD is down 2.4 percent this year.

The more actively traded November contract sank 1.33 cents to $2.9715 a gallon.

ULSD’s crack spread versus WTI fell 2 cents to $22.47 a barrel. The premium over Brent slipped 30 cents to $16.43.

To contact the reporter on this story: Barbara 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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