Gasoline tumbled as stockpiles rose and demand slid to an eight-month low after Hurricane Sandy, and as concern mounted that President Barack Obama and the U.S. Congress won’t reach a budget deal.
Futures slid 4.1 percent as the Energy Department said supply climbed 2.88 million barrels to 202.4 million last week and demand sank 6.1 percent. Obama, after winning re-election, must work with a divided Congress to deal with a looming $607 billion in automatic spending cuts and tax gains known as the fiscal cliff.
“We knew demand was going to be off,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “We’re really off on broad market concerns. Whether it’s concerns about the fiscal cliff or the economy under the Obama administration, there’s concern over what’s going to happen over the next few months.”
Gasoline for December delivery fell 11 cents to settle at $2.5889 a gallon on the New York Mercantile Exchange. It was the biggest drop, not counting contract rollovers, since Dec. 14.
U.S. stockpiles jumped and demand sank after Sandy shut retail stations, terminals, refineries and pipelines, reducing the ability of drivers to buy fuel. The median estimate of 11 analysts surveyed by Bloomberg was for a 1.5 million-barrel decline in gasoline supplies.
Gulf Coast inventories rose 4.62 million barrels to 75.1 million, the highest since December, as Colonial Pipeline Co., which runs the largest system connecting Gulf refiners and East Coast markets, shut its main line into New Jersey after losing power. Inventories of gasoline in the East Coast, or Padd 1, fell 1.25 million barrels to 47.9 million, 8.7 percent below a year early, department data showed.
Demand for the motor fuel sank to 8.31 million barrels a day, the lowest level since the week ended March 2.
“It will take a couple of weeks to smooth all this out,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consultant in London. “Demand wasn’t nearly as bad as a lot of people expected. The fiscal cliff now becomes the issue in the U.S., where there is a divided legislature.”
Total gasoline imports slid 56 percent to 270,000 barrels a day, the least since December 1999. Imports of gasoline into the East Coast, where most U.S. imports land, sank 63 percent to 217,000 barrels.
Democrats retained control of the Senate in yesterday’s election while Republicans continue to hold a majority in the House of Representatives.
“Now the election is over, we’re still going to have a divided government and the market is turning its attention to what Congress is going to do about the looming fiscal cliff, if anything,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The concern is nothing will get done.”
Distillate supplies, which include heating oil and diesel, rose 131,000 barrels to 118.1 million in the seven days ended Nov. 2, according to department data. Analysts estimated a 1.25 million-barrel decrease, according to the survey.
December-delivery heating oil fell 9.08 cents, or 3 percent, to settle at $2.9621 a gallon, the biggest drop since July 23.
The average nationwide price for regular gasoline slipped 0.1 cent to $3.462 a gallon yesterday, AAA, the largest U.S. motoring organization, said today on its website. Prices have fallen every day since Oct. 10, sliding 35.6 cents to the lowest since July 20. The pump price reached a 2012 high of $3.936 on April 4.
The average price in New York City increased 1.9 cents to $4.121 a gallon yesterday, and on Long Island rose 2.8 cents to $4.096.