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Gasoline Skids to 12-Week Low on Supply Gain, Retail Sales Drop

April 12 (Bloomberg) -- Gasoline sank to a 12-week low on concern that U.S. and European economies are weakening, reducing fuel demand at the same time refineries increase output.

Prices slid 1 percent to the lowest level since Jan. 18. March U.S. retail sales fell the most in nine months. Cyprus said it will seek more aid from the European Union. Gasoline supplies and refinery inputs rose last week, government data show. The motor fuel is the worst performer this month in the Standard & Poor’s GSCI Index of 24 materials.

“The problems in Europe seem to have bubbled up again and retail sales are not looking too good on top of the weak fundamentals,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Gasoline for May delivery fell 2.92 cents to $2.8018 a gallon on the New York Mercantile Exchange on volume that was 6 percent below the 100-day average at 3:09 p.m.

Prices dropped 2.2 percent this week, the second consecutive weekly loss. Futures have declined 9.8 percent this month and 13 percent since reaching a 2013 high of $3.2035 on March 8.

“The market is hunting for a bottom here and I don’t think we’ve reached it yet,” McGillian said.

The May crack spread versus West Texas Intermediate crude widened $1 to $26.39 a barrel. The spread against Brent oil on ICE Futures Europe Exchange slipped 6 cents to $14.57.

East Coast

Inventories along the East Coast rose for the first time in five weeks last week as imports jumped 64 percent, according to EIA data. East Coast refiners processed the most oil since November 2011.

Gasoline was the top performer on the S&P GSCI through Feb. 15, gaining 11 percent on speculation that refinery maintenance and a spate of unplanned shutdowns of production units would limit supplies.

In the seven days ended Feb. 19, hedge funds and other large speculators increased bullish gasoline wagers to 90,542, the highest since April 2012, according to the Commodity Futures Trading Commission’s Commitments of Traders report. Bullish gasoline bets sank back to 63,856 by the week ended April 9.

“Gasoline has gone from first to worst,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The premise for this strength in gasoline was we were going to have this deep cycle of refinery maintenance that was going to limit supply. But there’s just no shortage here.”

Gasoline at the pump, averaged nationwide, fell 0.6 cent to $3.558 a gallon, AAA said today on its website. Prices have fallen 22.8 cents from the year-to-date high of $3.786 on Feb. 26 and are 34.9 cents below a year ago.

Ultra-low-sulfur diesel for May delivery declined 2.73 cents, or 0.9 percent, to $2.8718 a gallon on volume that was 38 percent above the 100-day average at 3:10 p.m. It was the lowest settlement in three weeks. Futures fell 1.3 percent this week.

To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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