Gasoline slid as the Federal Reserve signaled an end to bond purchases and labor market gains gave the central bank more reason to ease stimulus efforts, threatening to slow economic growth and reduce demand for fuel.
Futures fell after Fed officials said they will probably end their $85 billion monthly bond-buying program this year, according to minutes of a December policy meeting released yesterday. U.S. payrolls rose by 155,000 workers last month and the jobless rate matched a four-year low, Labor Department figures showed today. Oil product inventories jumped last week, the American Petroleum Institute reported.
“The Fed minutes really pulled the plug on a lot of commodities yesterday, and a better-than-expected jobs number is bearish because it increases pressure to remove extra stimulus,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Gasoline for February delivery fell 3.05 cents, or 1.1 percent, to $2.7672 a gallon at 9:27 a.m. on the New York Mercantile Exchange.
The median estimate of 82 economists surveyed by Bloomberg called for an increase of 152,000 jobs in December. The unemployment rate held at 7.8 percent after the November figure was revised up from a previously reported 7.7 percent.
Fed Chairman Ben S. Bernanke said on Dec. 12 that the Fed will continue its bond-buying program until officials see “substantial improvement in the outlook for the labor market.”
The Fed minutes yesterday “raised expectations that the easing policies will taper off this year,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
The industry-funded API reported yesterday that gasoline inventories rose 3.32 million barrels last week and distillate stockpiles increased 6.71 million.
“Products are under pressure as the API stats show a significant gain in both gasoline and distillate inventories,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The Energy Department is scheduled to report last week’s inventories at 11 a.m. today in Washington.
The department will probably report that distillate inventories rose 1.25 million barrels, according to the median estimate of 10 analysts in a survey by Bloomberg. Gasoline inventories probably increased 2.2 million barrels last week, the survey showed.
Heating oil for February delivery declined 1.87 cents, or 0.6 percent, to $3.0064 a gallon on the exchange.
The average nationwide retail price for regular gasoline rose 0.3 cent to $3.295 a gallon, AAA said today on its website.
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