March 19, 2010, 4:23 PM EDT
By Barbara Powell
March 19 (Bloomberg) -- Gasoline futures slid 2 percent as a surging dollar reduced the investment appeal of commodities and as demand for the motor fuel declined.
Gasoline, which reached a 17-month high March 17, tumbled as the dollar gained 0.6 percent against the currencies of six major U.S. trading partners as of 3:25 p.m. in New York. Motor fuel demand slipped 1.6 percent last week, according to the Energy Department.
“A breakout to the upside of the dollar index gives potential for considerable downside for commodities,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.
Gasoline for April delivery lost 4.53 cents, or 2 percent, to settle at $2.2556 a gallon on the New York Mercantile Exchange. Prices were little changed for the week.
“The market was kind of vulnerable from a technical standpoint,” said Fred Rigolini, vice president of Paramount Options Inc. in New York. “And the news of the India rate increase and the dollar rallying triggered a selloff.”
India’s central bank unexpectedly raised interest rates for the first time since July 2008, saying controlling price-gains has become “imperative” after inflation accelerated to a 16- month high.
Today’s decline comes as refiners increase output of the motor fuel in anticipation of greater demand with the approach of the summer driving season.
Gasoline Production
Finished gasoline production last week rose 2.3 percent to the highest since the week ended Jan. 1. Supplies were 3.6 percent above the five-year average for the period.
“The demand levels still aren’t significantly higher, so when you get gasoline up toward $2.30 and oil above $80, you run into resistance,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
The gasoline crack spread, or the difference between the fuel and crude oil, based on April contracts, narrowed about 38 cents to $14.06 a barrel. It was the first decline in six trading days.
Stockpiles of distillates, including heating oil and diesel, were 19 percent above the five-year average for the period, according to the department.
Heating oil for April delivery fell 4.24 cents, or 2 percent, to settle at $2.0767 a gallon on the exchange. Prices lost 0.8 percent this week. The heating oil crack spread, based on April contracts, narrowed about 26 cents to $6.54 a barrel.
Regular gasoline at the pump, averaged nationwide, rose 1.2 cents to $2.811 a gallon, AAA, the nation’s biggest motoring organization, said today on its Web site.
Source: http://www.businessweek.com/news/2010-03-19/gasoline-futures-fall-on-stronger-dollar-lower-product-demand.html
Comments
Post a Comment