Dec. 19 (Bloomberg) -- Gasoline rose as President Barack Obama and House Republican leaders continued budget negotiations and as supplies of the motor fuel fell on the East Coast.
Futures climbed 1.9 percent on optimism that Obama and House Speaker John Boehner will reach a deal to avert the so-called fiscal cliff, more than $600 billion in automatic tax increases and spending cuts set for January. Gasoline supplies in the Padd 1 region fell 445,000 barrels last week and are 15 percent below a year earlier, Energy Department data show.
“There was some optimism over the budget negotiations earlier in the week and the gains are being extended,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “Traders are talking about tightness in Padd 1, which I think is transitory.”
Gasoline for January delivery rose 5.22 cents to $2.7431 a gallon on the New York Mercantile Exchange, the highest settlement this month.
In two days of gains, gasoline has erased a loss for this year and is now up 2.1 percent in 2012.’
Padd 1 gasoline inventories fell 0.9 percent to 49.1 million barrels, the lowest seasonal level since the department began reporting weekly figures in 1990. The region includes New York Harbor, the delivery point for Nymex futures contracts.
Total U.S. gasoline inventories rose 2.21 million barrels to an eight-month high of 219.3 million in the week ended Dec. 14, the Energy Department reported today. Stockpiles have climbed 18.9 million barrels, or 9.4 percent, in four weeks. Demand increased 1.5 percent to 8.62 million barrels a day.
Distillate supplies fell 1.09 million barrels to 117 million barrels. It was the first decline in three weeks. Stockpiles rose the prior two weeks by 6.01 million barrels. The amount of products supplied jumped 20 percent from the previous week to 4.21 million barrels a day, the highest level in a year.
“It feels like we’re closer to a deal on the budget talks and the inventory numbers are way more positive than they were the last few weeks,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.
Heating oil for January delivery rose 3.91 cents, or 1.3 percent, to $3.0356 a gallon. Futures settled at the highest level since Dec. 3, extending this year’s increase to 3.4 percent.
The average nationwide cost for regular gasoline sank 1 cent to a $3.226 a gallon, AAA said today on its website. That’s the lowest level since Dec. 22.
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