Gasoline fell as a stronger dollar lessened the investment appeal of commodities and on speculation that a tropical storm in the Gulf of Mexico may have minimal impact on refinery production.
Futures sank 0.8 percent as Tropical Storm Don, on track to make landfall on the Texas coast late tomorrow, according to the National Hurricane Center, will have “little impact” on the industry, said Jim Rouiller, senior energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania. The dollar gained 0.4 percent against the euro as of 2:49 p.m. in New York.
“The impact to production will be quite small,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “It’s so far south and only of tropical storm strength.”
Gasoline for August delivery fell 2.47 cents to settle at $3.1176 a gallon on the New York Mercantile Exchange. The front-month gasoline contract has gained 2.8 percent this month following a 3.8 percent slide in June.
The more actively traded September contract lost 1.93 cents, or 0.6 percent, to $3.0638. August Nymex gasoline and heating oil futures will expire at the close of floor trading tomorrow.
Don, the fourth named storm of the Atlantic hurricane season, was 475 miles (840 kilometers) east-southeast of Corpus Christi, Texas, heading northwest at 15 miles per hour with maximum winds of 45 mph, according to a National Hurricane Center bulletin at 1:40 p.m. East Coast time. Storm alerts were posted from the Texas-Mexico border north to Galveston Island.
The U.S. Gulf Coast accounts for 42 percent of U.S. refining capacity, according to Energy Department data. The U.S. hasn’t had a direct hit from a tropical storm since Bonnie went ashore in Florida in July 2010. The last hurricane to hit the U.S. was Ike, a Category 2 storm, in Texas in 2008.
The dollar rose a second day against the euro as the House of Representatives is expected today to approve a debt-limit increase proposal that faces opposition from the Democratic-controlled Senate.
“The euro has trouble managing a rally, which puts a lid on commodity prices,” said Ray Carbone, president of Paramount Options Inc. in New York. “And the market is waiting on a decision” on the debt crisis.
Treasury Secretary Timothy F. Geithner has repeatedly said the government will run out of options for paying all of its bills on Aug. 2.
Senate Majority Leader Harry Reid said he will move tonight to kill House Speaker John Boehner’s debt-ceiling proposal, paving the way for Senate votes this weekend on a compromise.
“The market is indecisive as they keep an eye on the debt limit talks,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Regular gasoline at the pump, averaged nationwide, rose 0.8 cent to $3.706 a gallon yesterday, according to AAA data.
Heating oil for August delivery gained 2.26 cents, or 0.7 percent, to settle at $3.1052 a gallon on the exchange. August futures have gained 5.9 percent this month after sinking 4 percent in June. The September contract gained 2 cents to $3.1144.