Bloomberg News

Gasoline Falls Most in Two Months on Durable Goods, Home Prices

February 28, 2012

Gasoline fell the most since December as declines in durable goods orders and home prices raised concern about the pace of the U.S. economic recovery and fuel demand.

Futures dropped 2.8 percent, after rising 17 percent this year through Feb. 24, as bookings for goods meant to last at least three years slumped 4 percent in January, the most since 2009, Commerce Department data showed. The S&P/Case-Shiller index of property values in 20 cities sank 4 percent in December from a year earlier.

“There had been such an influx of bullish news, and all of a sudden it stops, and you say, ‘let’s take profit,’” said Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida.

Gasoline for March delivery fell 8.82 cents to settle at $3.0401 a gallon on the New York Mercantile Exchange. Prices have gained 13 percent in 2012.

“We’re just taking a breather today,” Smith said. “Gasoline could go down another 10 cents without breaking the uptrend.”

Orders for durables, excluding transportation equipment, decreased 3.2 percent, the most since October 2010, after a 2.1 percent rise. Home prices fell to the lowest level since the housing crisis began in mid-2006.

“Last week’s strong rally basically overextended itself,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Durable goods orders show that, while we might be seeing signs of improvement in the economy, it’s not all blue skies.”

Inventory Estimates

Gasoline inventories probably fell 425,000 barrels last week, according to the median estimate of 12 analysts in a survey by Bloomberg News. Distillate stockpiles declined 750,000 barrels while supplies of crude oil rose 1.1 million, according to the survey.

The Energy Department is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington.

Demand at the pump was 6.9 percent below year-earlier levels last week, according to MasterCard Inc. (MA)’s Spending Pulse report today. It was the biggest year-over-year decrease since Feb. 12, 2010.

“Gas prices are on everybody’s mind and demand for gasoline has been nothing but poor,” said Ray Carbone, president of Paramount Options Inc. in New York. “You’re seeing some long liquidation today.”

Regular gasoline at the pump, averaged nationwide, rose 1.8 cents to $3.716 a gallon yesterday, according to AAA data. Prices, which have increased 43.8 cents this year, were 10 percent higher than a year earlier.

March-delivery heating oil declined 6.26 cents, or 1.9 percent, to settle at $3.2238 a gallon on the exchange. Prices have gained 9.8 percent so far in 2012.

To contact the reporters 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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