Gasoline Futures Tumble for Fifth Straight Day
NEW YORK--Gasoline futures sank for a fifth straight day Thursday on lofty supplies and a retreat in crude oil prices due to economic anxiety.
January gasoline futures settled at $2.597 a gallon, down 4.1 cents, or 1.6%. Prices of the commodity have lost more than 6% in the last week due to concerns that production is more than meeting demand as consumers and businesses hold off on spending amid worries about the broader economy.
U.S gasoline inventories rose by 7.9 million barrels last week, the largest one-week increase in 11 years, according to data from the Department of Energy. Stocks of distillates, which include heating oil and diesel, rose by 3 million barrels, roughly five times the estimate of experts surveyed by Dow Jones Newswires.
Rising inventories were accompanied by a 3.4% decline in domestic fuel usage, according to the Energy Department.
The data were released Wednesday but continued to weigh on prices Thursday, analysts said.
"The market is well supplied," said Andy Lipow, president of Lipow Oil Associates, an energy consultancy. "This trend is going to continue over the next couple weeks, and should put further pressure on gasoline prices."
After fuel-supply disruptions earlier this year in California and later in the Northeast following Superstorm Sandy, consumers and energy investors had grown concerned that oil refineries were having trouble producing enough fuel.
But refining facilities in the Midwest and along the Gulf Coast have begun dialing up their capacity to near-record levels in recent weeks to take advantage of cheaper oil prices.
The increased activity, coupled with weak demand for gasoline, have weighed on prices at the pump. U.S. retail gasoline prices have fallen 9 cents from a month ago to $3.38 a gallon, according to AAA.
Futures for crude oil also weakened Thursday on concerns about the global economy. U.S. crude prices settled down $1.62, or 1.8%, at $86.26 a barrel. Brent futures settled at $107.03, down $1.78 or 1.6%.
European Central Bank President Mario Draghi Thursday said the ECB had cut its forecast for growth in the euro zone this year and next and said a recovery would only start "later in 2013."
Mr. Draghi said the ECB governing council's central estimate for the economy next year was a contraction of 0.3%, a sharp revision downward from growth of 0.5% only three months ago. For 2014, the ECB expects growth of between 0.2% and 2.2%.
Predictions of sagging growth in the euro zone translates to weaker demand for raw materials like crude oil.
"Today's [crude] selloff has been exacerbated by the news out of the ECB," said Matt Smith, an analyst with Summit Energy, a consultancy.
Mr. Smith said oil prices also have been hit by concerns that U.S. policy makers may not reach an agreement to avoid the "fiscal cliff" of tax increases and spending cuts, which most economists say will produce weak growth in the U.S. and stifle the energy appetite for the world's biggest crude consumer.
Front-month heating oil futures settled at $2.943 a gallon, down 4.8 cents, or 1.6%.
--Kathleen Madigan and Geoffrey Smith contributed to this article.
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