Gasoline Rallies Amid Optimism U.S. Default Will Be AvoidedBarbara Powell
Gasoline jumped to a two-week high amid optimism Congress will end the 16-day government shutdown and raise the debt ceiling, averting default.
Futures rose 1.6 percent as the Senate and the House plan to vote on a deal crafted by Senate leaders and supported by President Barack Obama. House Speaker John Boehner said Republicans won’t prevent a vote on the Senate compromise. Gasoline advanced amid a broader rally by commodities and equities.
“This adds optimism to all markets, commodities, stocks,” said Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida. “This has been going on since the first of the month. I bet we’re going to see a lot of money left the markets in general during that time.”
Gasoline for November delivery rose 4.23 cents to $2.7021 a gallon on the New York Mercantile Exchange, the first increase in four days. Trading volume was 12 percent below the 100-day average at 3:45 p.m.
The deadline is tomorrow for the government to raise the debt ceiling before the U.S.’s borrowing authority lapses.
“Volumes have come down,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Clients I’ve talked to are tired of this. There’s a fatigue in the market.”
The Senate accord would fund the government through Jan. 15 and suspend the debt limit until Feb. 7. Senate opponents of the agreement, including Texas Republican Ted Cruz, said they won’t stall a vote.
The Standard & Poor’s 500 Index jumped 1.4 percent in New York. Gasoline was the second-best performer today in the Standard & Poor’s GSCI index of 24 commodities, trailing sugar. The index itself jumped 0.8 percent, the most in four days.
The motor fuel’s crack spread versus WTI widened 70 cents to $11.20 a barrel. The premium to Brent increased 88 cents to $2.63 a barrel.
Pump prices, averaged nationwide, rose 1 cent to $3.357 a gallon, the largest increase since Aug. 29, Heathrow, Florida-based AAA said today on its website. Prices are 41.6 cents below a year ago.
Ultra-low-sulfur diesel for November delivery rose 2.23 cents, or 0.7 percent, to $3.0393 a gallon on volume that was 39 percent above the 100-day average.
ULSD’s premium versus WTI slipped 14 cents to $25.36 a barrel. The crack spread over Brent gained 4 cents to $16.79.