Bloomberg News

Gasoline Futures Slip on Speculation Demand Won’t Improve

December 29, 2011

Dec. 28 (Bloomberg) -- Gasoline futures fell for the first time in seven sessions on speculation that demand for the motor fuel won’t improve.

Futures declined as consumption in the four weeks ended Dec. 16, measured by deliveries to wholesalers, was 4.7 percent below a year earlier, Energy Department data show. Retail gasoline use through Dec. 23 was down 1.6 percent from 2010, according to MasterCard Inc.’s SpendingPulse report today.

“There’s continued decline in gasoline demand in a year- on-year comparison,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for January delivery fell 3.75 cents, or 1.4 percent, to settle at $2.6513 a gallon on the New York Mercantile Exchange. Prices are up 8.1 percent this year, after rising 41 percent through April 29.

Fuel use dropped below the year-earlier level for the 17th consecutive time last week, slipping 1.6 percent, according to the SpendingPulse report.

Demand may grow 0.2 percent next year after dropping 2.6 percent to a 10-year low in 2011, the department said in its Short-Term Energy Outlook Dec. 6.

Gasoline also weakened after the European Central Bank’s sheet soared to a record after increasing loans to keep credit flowing during the region’s debt crisis. The dollar gained 1 percent against the euro at 2:52 p.m. in New York, weakening the investment appeal of commodities.

Euro Weakness

“The market is reacting to the weakness in the euro,” said Phil Flynn, vice president of research at PFGBest in Chicago. “That balance report did shake us up a bit. And there’s no expectation gasoline demand is going to be strong.”

The Energy Department is scheduled to report last week’s inventories tomorrow. The report will probably show that distillate stockpiles fell 650,000 barrels, according to the median estimate of 10 analysts in a survey by Bloomberg News.

“We’ve got three months of winter ahead of us and people are expecting another draw in inventories last week,” Lipow said.

Supplies of gasoline decreased 500,000 barrels, according to the survey.

The industry-funded American Petroleum Institute is scheduled to report last week’s inventories at 4:30 p.m. today in New York.

January-delivery heating oil declined 1.51 cents, or 0.5 percent, to settle at $2.8934 a gallon. Prices are heading for a 14 percent gain in 2011.

Regular gasoline at the pump, averaged nationwide, rose 1.2 cents to $3.243 a gallon yesterday, according to AAA data. Prices were 6.4 percent above a year earlier.

--With assistance from Gabi Thesing in London. Editors: David Marino, Charlotte Porter

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


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