(See EXTRA for more on the Syrian conflict.)
Sept. 9 (Bloomberg) -- Gasoline slid to a nine-week low after crude dropped amid reduced concern that U.S. will launch a strike against Syria and as motor fuel inventories were above- average for this time of year.
Futures fell 1.8 percent. Crude dropped as President Barack Obama, in television interviews today and a speech to the nation tomorrow, seeks support to act against Syria for its alleged use of chemical weapons on civilians. Gasoline demand over the four weeks ended Aug. 30 was 0.3 percent below a year earlier, according to data from the Energy Information Administration. Inventories were 8.6 percent above a year earlier.
“The crude oil market is awaiting President Obama’s speech tomorrow and the outcome of congressional deliberations,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Gasoline is under additional pressure due to high inventories at the end of the gasoline driving season.”
Gasoline for October delivery fell 5.13 cents to $2.8024 a gallon on the New York Mercantile Exchange. Trading volume was 0.8 percent below the 100-day average at 3:23 p.m.
Losses deepened as White House spokesman Jay Carney said the administration is reviewing a proposal by Russia.
“If the establishment of international control of chemical weapons in the country will help avoid military strikes, we will immediately start working with Damascus,” Russian Foreign Minister Sergei Lavrov said after meeting his Syrian counterpart in Moscow. Syria’s government said it welcomed the idea.
“Maybe, this will give the U.S. a face-saving way not to attack,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The market is saying, ‘Hey, the odds of a strike are falling pretty dramatically.’”
West Texas Intermediate crude for October delivery, which reached the highest since May 2011 on Sept. 6, dropped $1.01 to $109.52 a barrel on the Nymex. October Brent crude sank $2.40 to $113.72 on the London ICE Futures Exchange.
The motor fuel’s crack spread versus West Texas Intermediate crude slipped $1.14 to $8.18 a barrel while the fuel’s premium over Brent widened 25 cents to $3.98.
Syrian President Bashar al-Assad has denied using the weapons in an Aug. 21 massacre. Syria’s government and its Russian ally called for peace talks and the return of United Nations chemical-weapons inspectors, countering Obama’s call for a narrowly targeted, rapidly executed strike on Assad’s war- making capability. Russian Foreign Minister Sergei Lavrov said his country urged Syria to give up its chemical arsenal to avoid a U.S. strike.
“This is a rally fueled by headlines, so to go higher it needs more headlines,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “I got bearish RBOB a few days ago. We’re past driving season and supplies are plentiful.”
Pump prices, averaged nationwide, fell 0.1 cent to $3.57 a gallon, Heathrow, Florida-based AAA said today on its website. Retail gasoline is 25.2 cents below a year earlier.
Ultra-low-sulfur diesel for October delivery fell 4.54 cents, or 1.4 percent, to $3.1183 a gallon on trading volume that was 17 percent below the 100-day average.
ULSD’s crack spread versus WTI narrowed 90 cents to $21.45 a barrel while the premium over Brent increased 49 cents to $17.75.
--With assistance from Lisa Lerer and Kathleen Hunter in Washington.
Editors: David Marino, Richard Stubbe