Gasoline Fluctuates as Weak Jobs Growth Lowers Fed Taper Concern

Gasoline fluctuated between gains and losses as December payrolls rose at the slowest pace since January 2011, indicating labor market growth has stalled.

Payrolls in December increased by 74,000, Labor Department figures showed today. Futures gained as much as 1 percent earlier on speculation the U.S. Federal Reserve will maintain its bond-buying pace to stimulate economic growth. The Fed, which will meet Jan. 28-29, announced in December a reduction of $10 billion in its monthly bond-buying program to $75 billion, citing a recovery in the labor market.

“The jobs report was terrible,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Given the poor jobs report, the expectation is interest rates will continue to remain low and the Fed will continue to maintain a significant bond buying program.”

Gasoline for February delivery rose 0.14 cent to $2.44 a gallon at 10:37 a.m. on the New York Mercantile Exchange. Trading volume was 25 percent below the 100-day average.

The 74,000 gain in payrolls was less than the median forecast of 197,000 jobs in a survey by Bloomberg. The unemployment rate dropped to 6.7 percent, the lowest since October 2008, as more people left the labor force.

“The numbers suggest the Fed doesn’t have the room to cut back on stimulus,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The drop in the unemployment rate is construed as people leaving the rolls.”

Crack Spreads

The motor fuel’s crack spread versus West Texas Intermediate crude, a rough measure of refining profitability, narrowed 62 cents to $18.71 a barrel. Gasoline’s premium to London-traded Brent crude widened 10 cents to $4.70.

The average U.S. pump price rose 0.5 cent to $3.312 a gallon, according to Heathrow, Florida-based AAA. Prices are 0.2 cent above a year earlier.

Ultra low sulfur diesel for February delivery slipped 0.33 cent to $2.9181 a gallon. Volume was 10 percent above the 100-day average.

Diesel’s crack spread versus WTI narrowed 86 cents to $30.18 a barrel. The premium over European benchmark Brent narrowed 10 cents to $16.21.

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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