Bloomberg News

Gasoline Slips on Lower Consumer Confidence, Less U.S. Demand

September 29, 2011

Sept. 29 (Bloomberg) -- Gasoline declined after reports that U.S. consumer confidence slid to the second-lowest on record and U.S. motor-fuel demand in July was lower than estimated.

Futures sank as the Bloomberg Consumer Comfort Index dropped to minus 53 in the period ended Sept. 25 from minus 52.1 the prior week. Energy Department monthly data showed gasoline demand averaged 8.96 million barrels a day in July, less than the 9.08 million estimated in weekly reports.

“This says everything about demand because when people are worried, they hang onto their wallets,” said Phil Flynn, vice president of research at PFGBest in Chicago. “And now we find out demand was actually less than we thought.”

Gasoline for October delivery fell 3.15 cents, or 1.2 percent, to settle at $2.6192 a gallon on the New York Mercantile Exchange.

The more actively traded November contract lost 1.67 cents, or 0.7 percent, to $2.5586. October gasoline and heating oil contracts expire at the end of floor trading tomorrow.

“This is indicative of the high prices consumers saw during the summer and it gets people more bearish about gasoline,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline deliveries to wholesalers in the week ended Sept. 23, measured on a four-week average, was 2.4 percent lower than a year earlier, according to department data.

European Debt Crisis

Futures have lost 14 percent in September and in the third quarter on concern that the European debt crisis that began in Greece would spread, endangering the region’s economy and reducing global growth.

Gasoline and heating oil rose earlier on optimism that the euro region’s credit crisis could be contained and as the U.S. economy grew faster than earlier estimated, easing fears that fuel demand will slip.

The U.S. economy expanded at a 1.3 percent pace in the second quarter, Commerce Department figures showed, higher than 1 percent in the previous estimate. Jobless claims fell 37,000 last week to 391,000, the fewest since April, according to Labor Department data.

German Vote

German lawmakers approved an expansion of the euro-area rescue fund’s firepower. The lower house of parliament passed the rescue measure. Its upper house will debate the fund tomorrow. Expanding the fund requires approval in all 17 euro countries, and nine have authorized the changes.

“Europe is not going to go under this weekend, that’s all we found out today,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Yes, there’s some optimism today but it’s just another Band-Aid.”

October-delivery heating oil fell 0.03 cent to settle at $2.8181 a gallon on the exchange, after touching $2.8724. The November contract lost 0.05 cent to $2.8266.

Futures have lost 8.4 percent this month and are down 3.9 percent for the quarter.

Regular gasoline at the pump, averaged nationwide, dropped 1 cent to $3.455 a gallon yesterday, according to AAA data. The average is at the lowest level since March 2 after falling every day since Sept. 9.

--With assistance from Robert Willis and Sho Chandra in Washington, Tony Czuczka and Brian Parkin in Berlin and Alexander Kowalski in New York. Editors: David Marino, Richard Stubbe

To contact the reporter on this story: Barbara J 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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