Aug. 20 (Bloomberg) -- Gasoline futures fell as crude tumbled on speculation that the Federal Reserve will reduce bond purchases, boosting interest rates and lowering investment demand for commodities.
Futures slipped 0.2 percent, while West Texas Intermediate crude dropped 2 percent. The Federal Reserve will publish minutes of its July meeting tomorrow. Ten-year yields have risen more than 20 basis points, or 0.2 percentage point, this month on speculation that a stronger economy may lead the Fed to slow stimulus as soon as September.
“Certainly the macro move is out of commodities as the Fed tapers and interest rates go up,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Gasoline for September delivery dropped 0.61 cent to settle at $2.9272 a gallon on the New York Mercantile Exchange on trading volume that was 20 percent below the 100-day average at 3:27 p.m. Futures touched $2.9581 earlier on concern that refiners reduced operating rates last week, trimming supplies of the motor fuel.
The Energy Information Administration will probably report tomorrow that gasoline stockpiles fell 1.5 million barrels last week, according to the median estimate of 11 analysts in a survey by Bloomberg. Refineries reduced operating rates by 0.5 percentage point, the survey showed. The industry-funded American Petroleum Institute issues its report at 4:30 p.m. today.
“People really are gearing up for these numbers tonight and tomorrow,” said Carl Larry, president of Houston-based Oil Outlooks & Opinions LLC. “Demand’s not that bad. It’s not great, but it’s been steady for the past few weeks. Any kind of fluctuation in production, it’s going to draw.”
Crack spreads strengthened as two Motiva Enterprises LLC Gulf Coast refineries shut units, including some at its Port Arthur refinery, the nation’s largest, with a capacity of 600,000 barrels a day. Motiva’s Convent refinery in Louisiana also shut units after a pump fire in a process unit.
The motor fuel’s spread versus West Texas Intermediate crude widened $1.88 to $17.98 a barrel. The fuel’s premium over October Brent fell 16 cents to $8.22 after Brent advanced on news that Ekofisk cargoes will be delayed.
Pump prices, averaged nationwide, fell 0.1 cent to $3.537 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 18.3 cents below a year ago.
Distillate inventories, including diesel and heating oil, probably increased 1 million barrels last week, the survey showed.
Ultra-low-sulfur diesel for September delivery rose 0.74 cent to $3.0784 a gallon on the Nymex on trading volume that was 1.5 percent below the 100-day average.
ULSD’s crack spread versus West Texas Intermediate crude rose $2.45 to $24.33 a barrel. The October contract’s premium over Brent was unchanged at $19.43 a barrel.
--With assistance from Dan Murtaugh in Houston and Lynn Doan in San Francisco. Editors: David Marino, Charlotte Porter