Bloomberg News

Gasoline Rises to Three-Month High as GDP Growth Supports Demand

December 20, 2013

Gasoline jumped to a three-month high as the U.S. economy expanded at a faster rate than previously estimated, indicating fuel demand may increase.

Futures are heading for a weekly increase of 5.2 percent percent, the largest since July. Gross domestic product climbed at a 4.1 percent annualized rate in the third quarter, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent, Commerce Department figures showed today.

“The market is seeing more economic evidence that is supportive of higher petroleum product demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Gasoline for January delivery rose 3.32 cents, or 1.2 percent, to $2.7733 a gallon at 9:11 a.m. on the New York Mercantile Exchange and touched $2.7783, the highest intraday level since Sept. 13. Trading volume was 35 percent above the 100-day average for the time of day.

Futures have risen every day this week in the longest rally since June 7 and are up 3.3 percent this month.

The motor fuel’s crack spread versus West Texas Intermediate, a rough measure of refining profitability, widened $1.40 to $17.73 a barrel. Gasoline’s premium to Brent increased 54 cents to $5.67 a barrel.

Gasoline and ultra-low diesel also rose as a French refinery strike has idled four of Total SA’s five plants in that country. The strike over workers’ pay, which freezes about 700,000 barrels a day of crude processing capacity, entered its eighth day today.

French Exports

“The French strike is resulting in less gasoline available for export from Europe while increasing the diesel import demand,” Lipow said.

The average U.S. pump price rose 1 cent to $3.222 a gallon, the first increase in 12 days, according to data from Heathrow, Florida-based AAA.

ULSD for January delivery gained 2.1 cents, or 0.7 percent, to $3.0516 a gallon on trading volume that was 20 percent above the 100-day average.

ULSD’s crack spread versus WTI widened 99 cents to $29.01 a barrel. The premium versus Brent rose 17 cents to $16.95 a barrel.

To contact the reporter on this story: Barbara Powell in Houston at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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