Bloomberg News

Gasoline Tumbles Amid Prospect of Fed Pullback, China Slowdown

June 20, 2013

Gasoline slid along with crude and other commodities on concern the Federal Reserve will reduce economic stimulus and as data indicated China’s growth is slowing. Crack spreads narrowed.

Futures fell 3.1 percent a day after Fed Chairman Ben S. Bernanke indicated the central bank may begin reducing its bond buying this year if the pace of economic recovery is in line with the Fed’s projections. Reports show China’s manufacturing is contracting.

“Tapering off is like raising rates,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Banking issues and bad manufacturing in China are putting more pressure on the market.”

July-delivery gasoline fell 8.84 cents to $2.804 a gallon at 9:58 a.m. on the New York Mercantile Exchange, the biggest drop since April 3. Trading volume was 55 percent above the 100-day average for the time of day. The Standard & Poor’s GSCI Index and July crude futures sank 2.5 percent.

Gasoline’s crack spread versus West Texas Intermediate narrowed $1.16 to $22.08 a barrel. Gasoline’s premium over August Brent fell 66 cents to $14.32.

A preliminary reading of China’s Purchasing Manager’s Index for June dropped to 48.3, compared with the 49.1 median estimate in a Bloomberg News survey of 15 economists.

China Rates

The People’s Bank of China added 50 billion yuan ($8.2 billion) to the financial system today after a cash squeeze drove money-market rates to record highs, said Hao Hong, chief China strategist at Bank of Communications Co.

Gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.598 a gallon, Heathrow, Florida-based AAA said today on its website. Prices have fallen for eight straight days to the lowest level since May 14.

Ultra-low-sulfur diesel for July delivery fell 7.8 cents, or 2.6 percent, to $2.8945 a gallon on trading volume that was 11 percent above the 100-day average.

ULSD’s crack spread versus WTI fell 79 cents to $25.82 a barrel. The premium over Brent declined 29 cents to $18.49.

To contact the reporter on this story: Barbara 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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