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Gasoline Fluctuates on US Jobs Report, Strengthening Dollar

Thursday, 09 Dec 2010 11:41 AM

Gasoline fluctuated as the dollar rallied and a government report indicated that the labor market is improving and fuel demand will increase.

Prices were little changed as a stronger dollar reduced the investment appeal of commodities. Futures rose earlier after the Labor Department reported that fewer Americans applied for jobless benefits last week, boosting speculation that fuel demand will improve.

“We tried to rally early on those initial unemployment claims and then the dollar bounced up and the euro took a dive,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.

Gasoline for January delivery gained 0.22 cent to $2.3068 a gallon at 10:47 a.m. on the New York Mercantile Exchange, after touching $2.3368. The premium of gasoline over crude oil, or the crack spread, based on January contracts, widened 38 cents to $8.89 a barrel.

The dollar gained 0.6 percent against the euro as of 10:56 a.m. in New York after Fitch Ratings reduced Ireland’s credit rating. The Standard & Poor’s 500 Index climbed 0.1 percent at 10:49 a.m. in New York, trimming an earlier 0.5 percent advance.

“The stocks got flattened out, and the dollar puts in a little pressure,” said Ray Carbone, president of Paramount Options Inc. in New York and a trader at the Nymex. “And as we go now into the end of the year, we’re going to have lower volume which creates questions about movement.”

Jobless Claims

Applications for jobless benefits fell last week to 421,000 from a revised 438,000 the prior week, Labor Department figures showed today. The four-week average, a less-volatile measure, dropped to the lowest level in more than two years.

“The economic data seems to suggest the jobs market is getting better and that increases the demand for gasoline,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The upside move should be limited because yesterday’s inventory report was bearish for gasoline.”

The Energy Department reported yesterday that gasoline stockpiles rose 3.81 million barrels last week to 214 million, a six-week high.

Heating oil for January delivery dropped 0.55 cent to $2.4552 a gallon. The crack spread, based on January contracts, widened 12 cents to $15.19 a barrel.

Stockpiles of distillate fuels, including heating oil and diesel, increased 2.15 million barrels to 160.2 million, the largest increase since Aug. 6. It was the first gain after 10 straight declines.

Regular gasoline at the pump, averaged nationwide, rose 0.7 cent to $2.975 a gallon yesterday, AAA said on its website. That’s the highest price since Oct. 18, 2008.

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