(See EXTRA for more news on the Syrian conflict.)
Aug. 30 (Bloomberg) -- Gasoline slid as crude retreated after British lawmakers refused to join the U.S. in a military strike against Syria and as the end of the U.S. summer driving season approaches.
Futures sank 1.6 percent as the U.S. lost Britain’s support yesterday in acting against Syria and its suspected use of chemical weapons, lessening concern of an imminent strike that might embroil the Middle East and disrupt oil supplies. U.S. gasoline demand dipped to a five-week low in the seven days ended Aug. 23 and in June was the lowest for that month since 2001, government data show.
“The market is waiting to see if the U.S. is willing to go it alone on Syria or will cobble together some amount of international support,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Gasoline has been under pressure since the EIA issued its June data yesterday.”
Gasoline for September delivery fell 4.78 cents to $3.0186 a gallon on the New York Mercantile Exchange, the second straight drop and lowest settlement in four days. Trading volume was 13 percent below the 100-day average at 2:48 p.m.
Prices fell 0.8 percent in August, following an 11 percent gain in July.
Secretary of State John Kerry said a U.S. intelligence assessment gives him “high confidence” that the Syrian regime used chemical weapons against its own people. Without a response from the U.S., Kerry said, “there will be no end to the test of our resolve.” The report is part of the case that President Barack Obama’s administration is building to justify acting against Syrian President Bashar al-Assad’s government.
West Texas Intermediate crude for October delivery fell $1.15 to $107.65 a barrel on the Nymex, after reaching a two- year high of $110.10 two days ago. Crude advanced 2.5 percent this month.
“Because of the U.K. vote, it doesn’t take away the possibility of a military strike, but it reduces likelihood of a coordinated effort or a large-scale effort,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
September gasoline and diesel futures expired at the end of floor trading today. Nymex floor trading will be closed on Sept. 2 for the Labor Day holiday. The more-actively traded October contract, which represents winter-grade gasoline, which can be blended from a wider range of components, increasing supply, slipped 4.05 cents to $2.8901 a gallon.
“It’s indicative of the end of the driving season and the beginning of a period of lower demand,” Lipow said.
Demand for the motor fuel in the U.S. typically declines after the Labor Day holiday, which falls on Sept. 2 this year, as students return to school.
Supplies of reformulated gasoline, or RBOB, along the U.S. East Coast, where Nymex futures are delivered, rose 687,000 barrels last week to 17 million, 8 percent higher than a year ago. Total U.S. inventories were 5 percent above the five-year average for that week, according to an EIA analysis.
“We almost have a glut of supply,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “It’s hard to keep the market up unless we have a refinery issue or the Syrian situation seems to heat up.”
The motor fuel’s crack spread versus West Texas Intermediate crude narrowed 55 cents to $13.73 a barrel. The fuel’s premium over Brent slipped the same amount to $7.37 a barrel.
Pump prices, averaged nationwide, rose 2.1 cents to $3.585 a gallon, the highest since Aug. 7, Heathrow, Florida-based AAA said today on its website. Retail prices are 24.1 cents below a year earlier, AAA data show.
Ultra-low-sulfur diesel for September delivery fell 4.54 cents, or 1.4 percent, to settle at $3.1395 a gallon on trading volume that was 8.6 percent above the 100-day average. Futures gained 3.2 percent this month, third consecutive advance. The October contract declined 5.17 cents, or 1.6 percent, to $3.1366.
ULSD’s crack spread versus WTI narrowed $1.02 to $24.09 a barrel, while the premium over Brent also dropped $1.02 to $17.73.
--With assistance from Roger Runningen and Margaret Talev in Washington. Editors: David Marino, Charlotte Porter