Gasoline fell on speculation that U.S. inventories rose an eighth consecutive week amid seasonally low demand.
Futures sank as stockpiles probably rose 2.6 million barrels, according to the median estimate of 10 analysts in a survey by Bloomberg. Demand for the motor fuel slipped to the lowest level in almost a year in the week ended Jan. 4, Energy Department data show.
“Gasoline inventories have risen so substantially over the last three months that the market remains under pressure, as demand in January and February is traditionally the weakest of the year,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for February delivery fell 2.54 cents, or 0.9 percent, to $2.7287 a gallon at 11:34 a.m. on the New York Mercantile Exchange. Volume was 23 percent above the 100-day average.
The Energy Department’s Energy Information Administration is scheduled to report last week’s supplies at 10:30 a.m. tomorrow in Washington.U.S. gasoline stockpiles were the highest since February 2011 in the week ended Jan. 4, according to EIA data.
Prices also slipped as President Barack Obama and congressional Republicans appear headed toward a confrontation over the raising the debt limit to keep the government running.
The Treasury reached its statutory borrowing limit on Dec. 31 and is using “extraordinary” measures to pay for the government. Those measures will work only until mid-February to early March, Treasury Secretary Timothy F. Geithner said in a letter yesterday to congressional leaders.
Geithner warned of severe economic hardship if Congress doesn’t raise the limit, which has been lifted 79 times since 1960, including 49 times under Republican administrations.
“The crisis that will happen if we don’t get the debt ceiling raised and warnings by the Treasury secretary have inflamed the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We also have anemic fuel demand.”
Heating oil’s decline was less than gasoline as crude oil slipped and colder weather in the U.S. may boost demand for the fuel and higher gasoil prices in Europe will attract distillate shipments.
The National Weather Service’s Climate Prediction Center estimated temperatures will be lower than normal across the Northeast from Jan. 20 through Jan. 28.
“Heating oil is just supported by the colder weather,” Lipow said.
Heating oil for February delivery fell 1.63 cents, or 0.5 percent, to $3.0462 a gallon after touching $3.0774.
Distillate inventories probably rose 1.5 million barrels last week, according to the survey.
Gasoil rallied in Europe as the cold deepened across the continent, with the February contract gaining $5 to $959.50 a metric ton on the ICE Futures Europe exchange in London.
The average nationwide retail price for regular gasoline fell 0.7 cent to $3.297 a gallon, AAA said today on its website. That’s the fourth consecutive decline.
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