Oct. 18 (Bloomberg) -- Diesel gained on indications that the Federal Reserve will delay tapering stimulus because the protracted government shutdown and political wrangling that preceded it may have disrupted growth.
Futures rose 1.5 percent amid optimism demand will increase as comments by two Fed regional presidents yesterday signaled a reduction in debt buying won’t occur this year. The 16-day partial government stoppage ended late Oct. 16 just as the U.S. was nearing default. The budget deal funds the government through Jan. 15 and suspends the debt limit until Feb. 7.
“How the debt crisis played out doesn’t give a lot of comfort to the Fed on their timing on tapering,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “If we can’t get any harmony between the parties as they’re negotiating the next time around we won’t see any tapering.”
Ultra-low-sulfur diesel for November delivery rose 4.54 cents to $3.0354 a gallon on the New York Mercantile Exchange on trading volume that was 32 percent above the 100-day average at 2:58 p.m. Prices were little changed this week and have gained 2.2 percent this month.
Fed Bank of Dallas President Richard Fisher, who has consistently called for reducing record stimulus, said in a speech yesterday that fiscal discord has undermined the argument for tapering the Fed’s $85 billion in monthly bond purchases.
Chicago Fed President Charles Evans said yesterday the central bank shouldn’t slow the pace of asset purchases as the flow key data used to gauge growth stopped during the shutdown.
Futures also gained on speculation global oil demand will increase as China’s gross domestic product rose 7.8 percent in the July-September period from a year earlier, the National Bureau of Statistics said today. Industrial production advanced in September by 10.2 percent, in line with the median estimate of economists surveyed by Bloomberg.
“The numbers out of China are supporting markets today,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
ULSD’s premium versus WTI widened $1.77 to $26.68 a barrel. The crack spread over Brent rose 99 cents to $17.40.
Gasoline for November delivery advanced 2.53 cents, or 1 percent, to settle at $2.6732 a gallon. Prices are up 0.2 percent this week and have increased 1.5 percent in October. Trading volume was 36 percent below the 100-day average.
The motor fuel’s crack spread versus WTI widened 92 cents to $11.46. The premium to Brent rose 16 cents to $1.69 a barrel.
Pump prices, averaged nationwide, were unchanged at $3.36 a gallon, Heathrow, Florida-based AAA said today on its website. Prices are 37.7 cents below a year ago.
--Editors: David Marino, Charlotte Porter