Gasoline Sinks to Five-Week Low on Labor Market, Demand Concerns

Gasoline dropped to a five-week low on speculation that demand will weaken as U.S. job growth slows amid higher pump prices.

Futures have declined 2.7 percent in two days since an April 6 Labor Department report that showed that the U.S. added the fewest jobs in five months in March. Retail prices are 4.3 percent higher than a year ago. Gasoline is the best performer this year in the Standard & Poor’s GSCI index of 24 commodities.

“You had a bad jobs number and there’s a decent correlation between payrolls and gasoline consumption,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “Gasoline has led the market higher. Now, it has more the potential to lead the market lower.”

Gasoline for May delivery fell 4.71 cents, or 1.4 percent, to settle at $3.2496 a gallon on the New York Mercantile Exchange. Futures have gained 21 percent this year.

Regular gasoline at the pump, averaged nationwide, slipped 0.5 cent yesterday to $3.922 a gallon, according to AAA, the nation’s biggest motoring club.

The U.S. added 120,000 jobs last month, fewer than the 205,000 projected in a Bloomberg News survey. The jobless rate declined to a three-year low of 8.2 percent, as people left the workforce. The participation rate, the share of working-age men and women with jobs or seeking employment, fell to 63.8 percent from 63.9 percent in February.

Gasoline Demand

U.S. retail gasoline demand this year through April 6 was 5.3 percent below a year earlier, according to MasterCard Inc.’s SpendingPulse report today. Consumption will average 8.65 million barrels a day in 2012, down from 8.74 million in 2011, the Energy Information Administration said today in its monthly Short-Term Energy Outlook. That’s 20,000 barrels a day below last month’s projection of 8.67 million.

Gasoline also slid today as crude futures sank amid projections that U.S. oil supplies reached the highest level for this time of year since 1990. Crude for May delivery on the Nymex retreated $1.44 to $101.02 a barrel, the lowest settlement in eight weeks.

“It’s a combination of economic uncertainty, rising crude inventories and anemic gasoline demand, said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Iran and the five permanent members of the United Nations Security Council plus Germany are scheduled to hold talks on the Persian Gulf nation’s nuclear program April 14 after a 15-month hiatus.

‘‘People are waiting to see what will happen in the meetings this weekend,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Brent Crude

Brent crude for May settlement fell $2.79 to $119.88 a barrel on London’s ICE Futures Europe exchange, and its premium to U.S. benchmark West Texas Intermediate crude narrowed to $18.86 from $20.21 yesterday. Brent is the benchmark for oil used in European refineries that export gasoline to the East Coast.

“Gasoline is more closely tied to Brent than it is to WTI,” said Vince Lanci, managing partner at Echobay Partners LLC, a commodity investment firm in Stamford, Connecticut. “Gasoline is down because Brent has finally cracked and broken out of a trading range.”

May-delivery heating oil fell 5.02 cents, or 1.6 percent, to settle at $3.0957 a gallon on the Nymex, the fourth loss in five sessions. Prices have gained 5.5 percent this year.

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