THE WALL STREET JOURNAL

 

Gasoline Futures Gain On Strong Demand Indications

December 20, 2013, 10:34 a.m. ET - By Nicole Friedman

 

--U.S. third quarter GDP rose by 4.1%, revised higher due to stronger consumer spending
--RBOB futures up more than 5% for the week
--Unrest in Libya, South Sudan spurs oil supply concerns

 

NEW YORK--Gasoline futures climbed to a three-month intraday high after revised U.S. economic data
showed higher consumer spending, including on daily items like gasoline.


Front-month January reformulated gasoline blendstock, or RBOB, rose as high as $2.7783 a gallon, the
highest intraday price since September.


Light, sweet crude for February delivery recently traded down 34 cents, or 0.3%, at $98.71 a barrel on the
New York Mercantile Exchange. Brent crude on ICE Futures Europe rose 77 cents, or 0.7%, to $111.06 a
barrel.


The U.S. gross domestic product expanded by 4.1% in the third quarter, according to the Commerce
Department, stronger than the previously estimated 3.6% rate of growth. The revision was largely due to
stronger consumer spending, which the department says grew at a 2% annual rate in the summer.
Previously, the department has estimated consumer spending growth of 1.4%.


RBOB futures are trading up more than 5% on the week.


"RBOB has certainly staged a pretty strong recovery this week," said Andy Lebow, senior vice president
at Jefferies Bache LLC in New York. "Gasoline demand has been very strong."


Data released Wednesday by the Energy Information Administration showed a 13% increase in implied
demand for petroleum products from the prior week to 21 million barrels a day, the highest level since
April 2008.


Workers at Total SA's (TOT) refiners in France also voted to extend a week-long strike, tightening global
gasoline supplies. Four refineries in France have either stopped operations or are shutting down in the
next few days, a union representative told The Wall Street Journal.


U.S. crude oil, meanwhile, edged lower as traders who had bet on higher prices cashed in their profits
ahead of a holiday week.


Prices settled at a two-month high Thursday on expectations that an improving U.S. economy could lead
to increased oil demand.


"There are some traders that feel like we've gotten a little too hot and bothered and could be, on a Friday,
looking at a little profit-taking," said Peter Donovan, energy broker at Liquidity Energy.


Brent crude futures advanced on global supply concerns, as labor unrest continued to limit Libyan exports
and fighting in South Sudan threatened the country's oil-producing regions. South Sudanese oil
production has not been halted, but some market watchers think it could be as violence continues.


January heating oil recently traded up 2.53 cents, or 0.8%, at $3.0559 a gallon.
 

--Inti Landauro contributed to this article.
Write to Nicole Friedman at nicole.friedman@wsj.com


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND MAY NOT BE
SUITABLE FOR EVERYONE. OPTIONS, CASH AND FUTURES MARKETS ARE SEPARATE AND
DISTINCT AND DO NOT NECESSARILY RESPOND IN THE SAME WAY TO SIMILAR MARKETS
STIMULUS. A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN
TANDEM WITH THE RELATED FUTURES & OPTIONS CONTRACT BEING OFFERED. SEASONAL
DEMAND AND CURRENT NEWS IN COMMODITIES ARE ALREADY REFLECTED IN THE PRICE OF
THE UNDERLYING FUTURES.