Gasoline futures dropped on concern a new round of U.S. budget negotiations won’t yield an agreement, curbing economic growth and fuel demand at a time when inventories are at 10-year seasonal highs.
Gasoline for February delivery fell as much at 0.7 percent as Senate Minority Leader Mitch McConnell said further tax changes are off the table as lawmakers and President Barack Obama gear up for a fight next month over raising the government’s debt limit. Gasoline inventories increased 2.57 million barrels to 225.7 million in the week ended Dec. 28, the Energy Department reported on Jan. 4.
“The end-of-the-year rally was based on relief that budget negotiations didn’t go over the cliff,” Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York, said in a phone interview. “But there’s still an overhang. Now we’ve got to start talking about the debt ceiling. That’s going to be an overriding issue, unfortunately, for all of us.”
Gasoline futures fell 1.52 cents, or 0.6 percent, to $2.7491 a gallon at 9:19 a.m. on the New York Mercantile Exchange.
Heating oil for February delivery dropped 0.38 cent to $3.0139 a gallon on the Nymex.
Gasoline at the pump, averaged nationwide, fell 0.2 cent to $3.297 a gallon, AAA said on its website today.
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