Gasoline Rises as Employment Gains Indicate Stronger Fuel Demand

Apr 04, 2014 3:31 pm ET

April 4 (Bloomberg) -- Gasoline futures advanced as more Americans went to work in March, signaling that demand for the motor fuel will improve for the summer driving season.

Futures rose 0.7 percent. March payrolls increased 192,000 after a 197,000 gain in February that was larger than first estimated, the Labor Department reported. Private employment, which excludes government jobs, surpassed the pre-recession peak for the first time.

“The positive jobs report with more people returning to the workforce is supportive for gasoline demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

May-delivery gasoline advanced 1.95 cents to $2.9313 a gallon on the New York Mercantile Exchange, the highest settlement in five days. Volume was 12 percent above the 100-day average as of 2:55 p.m. Prices declined 0.2 percent this week.

The number of people employed as a share of the working-age population increased to 58.9 percent, the highest since August 2009. The U.S. has recovered all but 437,000 of the 8.7 million jobs, including those at government agencies, lost as a result of the last recession.

“This is the perfect jobs report for a little bit of a rally,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

The motor fuel’s crack spread versus West Texas Intermediate crude, based on settlement prices, dropped 3 cents to $21.97 a barrel. Gasoline’s premium to Brent increased 25 cents to $16.39.

The average U.S. pump price rose 0.4 cent to $3.57, the highest since Sept. 8, according to data from Heathrow, Florida- based AAA.

Ultra low sulfur diesel for May delivery gained 0.17 cent to close at $2.9079 a gallon. Volume was 29 percent below the 100-day average. Prices declined 1.7 percent this week and have dropped in five of the past six weeks.

Diesel’s crack spread versus WTI narrowed 78 cents to $20.99. The premium to Brent fell 50 cents to $15.41.

--With assistance from Lorraine Woellert in Washington.