Gasoline slid to a two-week low on concern that the White House and congressional Republicans are far apart in budget negotiations and on speculation that U.S. supplies of the motor fuel rose last week.
Futures fell after President Barack Obama’s administration yesterday rejected House Speaker John Boehner’s counterproposal to avoid the so-called fiscal cliff. Gasoline inventories probably rose 1.55 million barrels last week, according to the median estimate of 12 analysts in a survey by Bloomberg.
“Whenever there is a renewed concern about the fiscal cliff, the market has pulled back,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London.
Gasoline for January delivery fell 3.75 cents, or 1.4 percent, to settle at $2.689 a gallon on the New York Mercantile Exchange, the biggest decline since Nov. 20.
Obama, a Democrat, is negotiating with the Republican-controlled House of Representatives on a deal to avert $607 billion in tax increases and spending cuts set for January. Obama wants higher taxes on upper-income Americans to help reduce the federal deficit. Boehner’s proposed $2.2 trillion of spending cuts and new revenue didn’t include a tax increase.
Obama said in a Bloomberg Television interview today that the stalemate will continue so long as Republicans refuse to raise marginal income tax rates on the top 2 percent of earners.
“There’s a sense that if we go over the fiscal cliff we’ll take the rest of the world with us,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The market is also pricing in a build in inventories.”
Gasoline stockpiles rose 3.87 million barrels in the week ended Nov. 23 to 204.3 million barrels, the highest level since the week ended Aug. 3, according to Energy Department data. The department is scheduled to report last week’s inventories tomorrow in Washington.
Gasoline supplies are expected to rise as refineries, including Phillips 66’s Borger, Texas, plant, return units to service after maintenance and repairs. Refineries probably operated at 89.1 percent of capacity in the seven days ended Nov. 30, up 0.5 percentage point from the prior week, according to the survey.
“Refineries will be turning this oil surplus into a product surplus,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “There is already an impact from the fiscal cliff.”
January-delivery heating oil fell 5.22 cents, or 1.7 percent, to settle at $3.004 a gallon, the first decline in four days and largest drop since Nov. 7. Supplies of distillates, including heating oil and diesel, probably rose 850,000 barrels last week, according to the survey.
The average nationwide cost for regular gasoline fell 0.6 cent to a $3.381 a gallon, AAA said today on its website. That’s the lowest level since July 9. The pump price reached a 2012 high of $3.936 on April 4.