Gasoline slid to the lowest level in 11 months as the U.S. began a second week of a partial government shutdown that threatens to weaken the economy and reduce fuel demand.
Futures fell to the lowest intraday level since Nov. 5. The closure continued as President Barack Obama’s administration said it won’t negotiate over funding the government and House Republican leaders demanded concessions, including defunding the Affordable Care Act. A potential lapse in U.S. borrowing authority if Congress doesn’t raise the debt ceiling also looms.
“The oil market is concerned about the continued impact of the shutdown on petroleum product demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for November delivery fell 3.07 cents, or 1.2 percent, to $2.5769 a gallon at 10:19 a.m. on the New York Mercantile Exchange. Trading volume was 14 percent above the 100-day average.
Futures also sank a second straight day as Tropical Storm Karen appeared to have caused minimal disruption to production and distribution on the Louisiana and Mississippi Gulf Coasts.
“People felt there was enough product to make it through the tropical storm and the expectation was for minimal impact,” Lipow said.
The motor fuel’s crack spread versus West Texas Intermediate crude widened 45 cents to $6.13 a barrel. The fuel flipped to a 2-cent discount to Brent from a 6-cent premium Oct. 4. It’s the first time since December 2011 that Nymex gasoline was below Brent on ICE Futures Europe.
Pump prices, averaged nationwide, fell 0.4 cent to $3.346 a gallon, the lowest level since Jan. 25 and 46 cents below a year ago, Heathrow, Florida-based AAA said today on its website.
Ultra-low-sulfur diesel for November delivery slipped 2.53 cents, or 0.8 percent, to $2.9737 a gallon on trading volume that was 8.8 percent below the 100-day average.
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