Gasoline fell as U.S. supplies climbed to an eight-month high last week and on concern that budget talks between the White House and Congressional Republicans are stalled, threatening the economic recovery.
Futures slipped as inventories rose 5 million barrels as refiners operated at the highest seasonal rates since 2004, Energy Department data show. House Speaker John Boehner repeated his assertion that President Barack Obama’s budget proposal is “anything but” balanced and accused the president of being “not serious” about cutting spending.
“The market is still concerned about Congress and the president going back and forth,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Refinery utilization is at a nearly record level.”
Gasoline for January delivery fell 4.44 cents, or 1.7 percent, to settle at $2.6021 a gallon on the New York Mercantile Exchange.
Obama, a Democrat, is scheduled to meet today at 5 p.m. Washington time with Boehner, the top Republican in the GOP-controlled-controlled House to negotiate averting the so-called fiscal cliff of automatic tax increases and budget cuts set for January. Both sides have said it’s unlikely a deal could get done before the Dec. 25 Christmas holiday.
Today’s decline is the first in five days. Futures rose yesterday after the Federal Reserve’s Federal Open Market Committee announced additional stimulus for the economy. The Fed will buy $45 billion a month of Treasury securities starting in January.
“The stimulus is really bullish,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The reason why the market isn’t euphoric over the stimulus is the fiscal cliff and the market is relatively well-supplied.”
Gasoline stockpiles have risen 8.3 percent in three weeks, increasing 16.7 million barrels.
Distillate inventories, including heating oil and diesel, rose 2.99 million barrels to 118.1 million last week. Stockpiles are at the lowest seasonal level since 2000.
“Distillate levels are still at the lower end of the range for this time of the year but gasoline inventories are improving,” Lipow said.
Heating oil for January delivery fell 2.31 cents, or 0.8 percent, to settle at $2.9437 a gallon a gallon on the exchange.
The average nationwide cost for regular gasoline fell 1.4 cents to a $3.301 a gallon, AAA said today on its website. That’s the lowest level since Jan. 3.