Gasoline Slides as Stockpiles Increase Amid U.S. Budget Impasse

Gasoline fell, capping a fourth weekly decline, as supplies rose on concern that the U.S. economy will weaken amid the congressional budget impasse.

Futures slid 1.1 percent. Gasoline supplies increased last week to a three-year seasonal high, according to Energy Information Administration data. The Democratic-controlled Senate voted today on a stopgap spending bill that will be sent to the Republican-dominated House. Sept. 30 is the end of the fiscal year.

“We saw an inventory build this week and the market recognizes we’re going into a slower demand season,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “There is concern about the congressional gridlock we’re seeing.”

Gasoline for October delivery fell 2.88 cents to settle at $2.6762 a gallon on the New York Mercantile Exchange, down 0.3 percent for the week. Trading volume was 15 percent below the 100-day average. Prices are down 4.8 percent this year and 2.8 percent in the third quarter.

The October contract expires at the close of the session Sept. 30. The more actively traded November contract fell 2.85 cents, or 1.1 percent, to $2.6602 a gallon.

A three- to-four-week shutdown of the U.S. government would reduce fourth-quarter economic growth by 1.4 percentage points, Mark Zandi of Moody’s Analytics Inc. estimates.

‘Bearish Uncertainty’

“This is creating bearish uncertainty,” said Ray Carbone, president of Paramount Options Inc. in New York. “If they make an agreement, that can change the market.”

The House has passed a measure that would deny funding for President Barack Obama’s health-care law as part of a bill to pay for government operations after Sept. 30. The Senate vote to pay for the government through Nov. 15 after cutting language to halt the health-care funding.

“There is concern that the economy would suffer and that demand would fall for gasoline,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.

The motor fuel’s crack spread versus West Texas Intermediate crude narrowed $1.04 to $8.86 a barrel, down from $13.73 on Aug. 30. The fuel’s premium over Brent fell 62 cents to $3.10.

Pump prices, averaged nationwide, fell 1.2 cents to $3.422 a gallon, the lowest level since Jan. 29 and 37.3 cents below a year ago, Heathrow, Florida-based AAA said today on its website.

Ultra-low-sulfur diesel briefly reversed a loss as European gasoil strengthened after workers at Scotland’s sole oil refinery voted to strike, threatening to reduce fuel supply in northern Europe.

Strike Vote

Ineos Group Ltd.’s Grangemouth plant can process 210,000 barrels a day of crude, according to data compiled by Bloomberg. The Unite union said in an e-mailed statement that 81 percent of those who voted supported the action. Gasoil for October delivery on ICE Futures Europe exchange gained as much as 0.8 percent.

“Thirty percent of that refinery’s output is distillate, so this will have a huge impact on the distillate market,” Sen said.

Ultra-low-sulfur diesel for October delivery fell 1.36 cents, or 0.5 percent, to $2.9901 a gallon on trading volume that was 3 percent below the 100-day average. Futures fell 0.5 percent this week and 1.8 percent this year, and are up 3.8 percent in the third quarter.

The more actively traded November contract fell 1.45 cents, or 0.5 percent, to $2.9848 a gallon.

ULSD’s crack spread versus WTI narrowed 45 cents to $22.49 a barrel. The premium over Brent slipped 2.9 cents to $16.73.

Before it's here, it's on the Bloomberg Terminal.