Bloomberg News

Gasoline Falls on Concern Lower Chinese Exports May Cut Fuel Use

March 12, 2012

Gasoline fell for the first time in four days on concern that fuel demand will decline after China’s exports grew less than estimated.

Prices sank as China’s growth slowed the first two months of this year, with exports and domestic demand moderating faster than analysts had forecast. Futures also declined on speculation that U.S. motor-fuel consumption may be curbed by pump prices that are 6.9 percent higher than a year ago, according to data from Heathrow, Florida-based AAA.

“There’s growing fear the Chinese economy may begin to slow, which could impact global oil demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “And there’s concern that high prices are going to dampen demand worldwide.”

Gasoline for April delivery declined 0.94 cent, or 0.3 percent, to settle at $3.323 a gallon on the New York Mercantile Exchange. Prices have gained 24 percent this year, making the motor fuel the best performer in Standard & Poor’s GSCI index of 24 commodities.

The GSCI (SPGSCI) fell 0.4 percent at 3:05 p.m. today in New York. Crude oil for April delivery declined $1.06, or 1 percent, to settle at $106.34 a barrel on the Nymex.

China, the world’s second-largest economy, had the biggest trade deficit last month in at least 22 years, the weakest January-February factory-production gain since 2009 and retail sales below the median economist estimate, government data showed March 9 and 10.

“It’s no longer a matter of is China slowing down but how fast is it slowing down,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida.

Gasoline Consumption

In the U.S., gasoline consumption slipped 1.2 percent in the week ended March 2, and the amount of the fuel supplied over the prior four weeks was 7.8 percent below a year earlier, Energy Department data show. Total fuel use over the four weeks ended March 2 was 6.1 percent lower than in 2011.

Futures also fell as concern eased that Iran’s nuclear program would lead to a disruption of oil supplies. Israeli Prime Minister Benjamin Netanyahu said on March 9 that it is still conceivable that international sanctions and diplomacy will stop Iran from developing nuclear weapons.

“China’s economy has been in the back of everybody’s mind and the situation with Iran has cooled off,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.

April-delivery heating oil slipped 2.09 cents, or 0.6 percent, to settle at $3.2429 a gallon on the exchange. Prices have gained 10 percent in 2012.

Regular gasoline at the pump, averaged nationwide, rose 0.9 cent to $3.801 a gallon yesterday, according to AAA data. Prices have gained 16 percent this year.

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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