Bloomberg News

Gasoline Rises Most in Two Months as Housing Starts Increase

December 20, 2011

Dec. 20 (Bloomberg) -- Gasoline futures advanced the most in two months, tracking gains in crude oil, after the U.S. Commerce Department said builders broke ground on the most houses in 19 months.

Prices rose 3.6 percent after the report that November housing starts increased to a 685,000 annual rate, the highest level since April 2010. Building permits also climbed to the most in more than a year.

“The markets really rallied when the housing starts came out,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “It boosted optimism that this sector is bottoming out and moving upward.”

Gasoline for January delivery rose 8.96 cents to settle at $2.5787 a gallon on the New York Mercantile Exchange, the biggest gain since Oct. 27. The futures are up 5.1 percent this year after gaining 20 percent last year and doubling in 2009.

Prices advanced as oil futures rose 3.6 percent to $97.22 a barrel on the exchange, boosted by the housing data and concern that further sanctions against Iran could crimp supplies.

The European Union added 180 Iranian officials and companies to a blacklist this month to intensify pressure on Iran over its nuclear program, after the U.S. imposed stiffer penalties in November.

“There are worries that the EU will impose more sanctions on Iran which would further tighten up oil supplies,” according to Lipow.

Iran Production

Iran is the second-largest producer of the Organization of Petroleum Exporting Countries, trailing Saudi Arabia. The country pumped about 5 percent of the world’s oil last year, based on BP’s annual Statistical Review of World Energy.

U.S. stockpiles of gasoline probably rose 1.5 million barrels last week, the median of 12 analyst estimates compiled by Bloomberg. Estimates ranged from a decline of 2 million barrels to an increase of 3 million. The Energy Department releases its weekly inventory report tomorrow at 10:30 a.m. in Washington.

Inventories of heating oil and diesel dropped 750,000 barrels, according to the survey.

January-delivery heating oil gained 6.9 cents, or 2.5 percent, to settle at $2.8494 a gallon, extending the gain this year to 12 percent.

Regular gasoline at the pump, averaged nationwide, fell 0.8 cent to $3.213 a gallon yesterday, according to AAA data. Prices, which are the lowest since Feb. 22, are 7.8 percent higher than a year earlier.

--With assistance from Moming Zhou in New York. Editors: David Marino, Margot Habiby

To contact the reporter on this story: Gene Laverty in Calgary at glaverty@bloomberg.net

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


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