Gasoline Slips as Japan Factory Output Falls, Dollar Gains

Gasoline and heating oil fell after a report that Japanese factory production declined and as a stronger dollar reduced the investment appeal of commodities.

Futures dropped as Japanese factory output slipped 4 percent in September from the previous month, the trade ministry said in a report in Tokyo today. Prices rose yesterday after a euro-region agreement to boost a bailout rescue fund and write down Greek debt and as the U.S. economy grew in the third quarter at the fastest pace in a year.

“Yesterday we were euphoric with the GDP and the Greece deal,” said Phil Flynn, vice president of research at PFGBest in Chicago. “But any weakness in economic data, you’re going to pull back a little bit and wonder if we came up too fast.”

Gasoline for November delivery fell 5.49 cents, or 2 percent, to $2.6871 a gallon at 9:18 a.m. on the New York Mercantile Exchange. The more actively traded December contract dropped 4.99 cents, or 1.8 percent, to $2.6573 a gallon.

The U.S. currency rose 0.3 percent against the euro at 9:35 a.m. in New York, after sliding 2 percent yesterday.

Futures surged 3.4 percent yesterday as European governments agreed to boost the rescue fund and persuaded bondholders to take 50 percent losses on Greek debt, lessening concern that the crisis would slow global recovery.

The agreement on a 50 percent haircut on Greek bonds may create an event of default if investors accept it, Fitch Ratings said in a statement today.

Japan’s industrial production fell more than the 2.1 percent decline projected in a survey by Bloomberg News.

“Manufacturing equals oil and demand and that spooked the market,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

November-delivery heating oil declined 3.77 cents, or 1.2 percent, to $3.0607 a gallon on the exchange. The December contract fell 3.46 cents, or 1.1 percent, to $3.0691 a gallon.

Regular gasoline at the pump, averaged nationwide, rose 0.4 cent to $3.448 a gallon yesterday, according to AAA data.

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.