July 29, 2013
Gasoline Futures Drop as Tropical Storm Dissipates in Atlantic.
Gasoline fell as Tropical Storm Dorian degenerated into a tropical wave, easing concern that it would affect U.S. refining and fuel distribution. Crack spreads narrowed. Futures slipped as much as 1.2 percent. Dorian was downgraded by the National Hurricane Center on July 27. Futures rose 0.9 percent on July 26 and crack spreads widened on the chance that Dorian might strengthen and approach the U.S. Gulf, where 45 percent of U.S. refining capacity is located, or the East coast, including New York Harbor, the delivery point for New York Mercantile Exchange gasoline and diesel contracts. “Gasoline should have opened down today because Tropical Storm Dorian dissipated over the weekend,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. Lipow August-delivery gasoline fell 3.32 cents, or 1.1 percent, to $3.0112 a gallon at 10:06 a.m. on the New York Mercantile Exchange. Trading volume was 18 percent below the 100-day average. Futures slipped 2.5 percent last week, the first weekly loss in a month. Gasoline’s crack spread versus WTI sank 84 cents to $20.60 a barrel. The fuel’s premium to Brent narrowed 94 cents to $18.03. Pump prices, averaged nationwide, fell a seventh consecutive day, dropping 0.3 cent to $3.631 a gallon, Heathrow, Florida-based AAA said today on its website. That’s the lowest level since July 14. Prices are 14.6 cents higher than a year earlier. Ultra-low-sulfur diesel for August delivery fell 0.73 cent to $3.0028 a gallon on trading volume that was 18 percent below the 100-day average. ULSD declined 2.6 percent last week, the first loss in five weeks.
Fed’s Bernanke should testify in AIG bailout lawsuit.
Federal Reserve Chairman Ben Bernanke should testify in the lawsuit by American International Group Inc’s (AIG) former chief Maurice “Hank” Greenberg against the United States over the insurer’s 2008 bailout, a judge ruled today. Judge Thomas Wheeler of the U.S. Court of Federal Claims rejected the government’s effort to keep Bernanke from being deposed, saying the Fed chairman was a “central figure” in the decision to bail out AIG. “Indeed, the court cannot fathom having to decide this multi-billion dollar claim without the testimony of such a key government decision maker,” Wheeler wrote. “These facts constitute ‘extraordinary circumstances’ for the taking of Mr. Bernanke’s deposition.” Greenberg’s Starr International Co, which once had a 12 percent stake in AIG, is suing over the government’s taking of a 79.9 percent stake in the insurer in September 2008 and a separate 1-for-20 reverse stock split in June 2009.
Pending home sales pull back in June as rates rise.
Contracts to purchase previously owned U.S. homes fell in June, retreating from a more than six-year high touched the prior month, suggesting rising mortgage rates were starting to dampen home sales. The National Association of Realtors said today its Pending Homes Sales Index, based on contracts signed last month, decreased 0.4 percent to 110.9. May’s index was revised down to 111.3 from a previously reported 112.3. Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to fall 1.0 percent. Compared to last year contracts were up 10.9 percent. “Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June,” said NAR chief economist Lawrence Yun. “The persistent lack of inventory also is contributing to lower contract signings.” Rates on 30-year fixed rate mortgages have climbed about a full percentage point since early May on expectations the U.S. Federal Reserve may begin scaling back its bond-buying stimulus program as early as September. Contracts were up in the West, but down in the Midwest and South. The index for the Northeast was unchanged.
Corn Extends Drop to 33-Month Low on U.S. Crop; Soybeans Decline.
Corn extended declines to a 33-month low in Chicago on speculation U.S. crops will escape damage from hot weather in the next few weeks as temperatures remain cooler than normal. Soybeans also dropped. Temperatures in central Iowa and Illinois, the top two corn-growing states, were forecast to remain below 80 degrees Fahrenheit (27 degrees Celsius) through at least tomorrow, National Weather Service data show. Temperatures in the Midwest and northern and central Great Plains may see “significant, persistent cool weather during August,” AccuWeather Inc. said in a report today. The U.S. Department of Agriculture has pegged domestic production at a record 13.95 billion bushels. “In most areas the crops are growing rapidly and production figures are higher and rising,” economist Dennis Gartman said today in his daily Gartman Letter. “We may well see a corn crop becoming steadily closer to 15 billion bushels.” Corn for December delivery fell 0.3 percent to $4.7475 a bushel by 7:04 a.m. on the Chicago Board of Trade. Earlier, the price touched $4.72 a bushel, the lowest for most active futures since October 2010. Futures fell 4.9 percent last week and traded below $5 a bushel on July 2 for the first time since October 2010. While below-normal temperatures in the next six to 10 days will favor corn pollination, extended cool weather might delay maturity and leave crops vulnerable to an early freeze, forecaster DTN said today. Some dry areas of the Midwest may see rain in the next six to 10 days, benefiting developing soybeans, it said.
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