Gasoline and diesel fell, following crude lower after the International Energy Agency projected higher North American oil production next year and trimmed its forecast for global demand growth.
Products and West Texas Intermediate crude slid as the IEA estimated non-OPEC oil output would rise by the most since the 1970s and reduced its 2014 demand growth outlook by almost 100,000 barrels a day. U.S. consumer sentiment sank to a nine-month low as the partial government shutdown entered the 11th day with no end to the budget impasse as the Oct. 17 deadline loomed for raising the debt limit and avoiding default.
“Products are down because WTI is unable to keep its head up,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market is telling us it thinks economic growth is going to slow and demand will be impacted.”
Gasoline for November delivery fell 3 cents, or 1.1 percent, to settle at $2.6681 a gallon on the New York Mercantile Exchange on trading volume that was 15 percent below the 100-day average at 2:51 p.m. Prices rose 2.3 percent this week, the first increase in six weeks.
November WTI declined 99 cents to $102.02 a barrel.
The motor fuel’s crack spread versus WTI narrowed 27 cents to $10.04 a barrel. The premium to Brent fell 74 cents to 78 cents a barrel.
Producers outside the Organization of Petroleum Exporting Countries, including the U.S. and Canada, will increase 2014 production by a near-record 1.7 million barrels a day to 56.4 million, the IEA said, boosting its forecasts from a month ago by 300,000 barrels a day.
As a result of the U.S. government shutdown, the U.S. Energy Information Administration said it will “need to cease operations and furlough EIA staff.” The agency will collect inventory data through today. That information won’t get processed or new analysis and data released until the shutdown is over, Jon Cogan, a spokesman for EIA in Washington, said in an e-mail.
“That coupled with the IEA report seeing stronger production is flushing out everyone who went long yesterday,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.
Gasoline also slipped as the cost of Renewable Identification Numbers, or RINs, sank after an internal document provided to Bloomberg showed that the Environmental Protection Agency is considering reducing requirements on the use of ethanol and other biofuels next year by 16 percent to 15.21 billion gallons. Ethanol-based RINs fell 27 percent today to 29 cents, according to data compiled by Bloomberg.
“There was a big impact when the IEA said they expect oil production to outstrip oil demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “We’ve also seen some downward pressure on products as a leaked EPA document is indicating a significant rollback in the renewable fuels standard, resulting in a fall in RIN prices.”
Pump prices, averaged nationwide, fell 0.6 cent to $3.345 a gallon, 46.8 cents below a year ago, Heathrow, Florida-based AAA said today on its website.
Ultra-low-sulfur diesel for November delivery fell 3.51 cents, or 1.1 percent, to settle at $3.0349 a gallon on trading volume that was 39 percent above the 100-day average. Prices gained 1.2 percent this week.
ULSD’s premium versus WTI narrowed 48 cents to $25.45 a barrel. The crack spread over Brent fell 95 cents to $16.19.