Gasoline Slips After Moody’s Announces European Ratings Review
Gasoline declined as Moody’s Investors Service announced a review of debt ratings for countries in the euro area, raising concern that the economy will falter and reduce demand.
Futures fell as equities slid and the dollar surged after Moody’s said last week’s European Union summit failed to yield “decisive policy measures” to contain the debt crisis. Gasoline supplies in the U.S. are at the highest level since July, according to Energy Department data.
“The market is trading like Europe is going to collapse tomorrow,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, said by phone. “U.S. macroeconomic data has been good for a month and it hasn’t made a difference.”
Gasoline for January delivery fell 3.25 cents, or 1.3 percent, to settle at $2.5636 a gallon on the New York Mercantile Exchange, a one-week low. Gasoline has gained 4.5 percent in 2011.
The dollar gained 1.5 percent against the euro at 2:53 p.m. in New York, reducing the investment appeal of commodities.
“Money is running back into the dollar again and pushing all these commodities down,” Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida, said by phone.
Gasoline’s decline was part of a broader slide in commodities. The S&P GSCI Index of 24 raw materials fell 1.2 percent at 2:54 p.m. in New York.
‘Few New Measures’
The agreement by European leaders to boost a rescue fund by $267 billion (200 billion euros) and tighten rules to curb future debts “offers few new measures,” Moody’s said today in an e-mailed statement.
“The market’s concern is that the result of this agreement will be less spending and more austerity, which will have a slowing effect on the economy,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said by phone.
Fitch Ratings, saying the summit did little to ease pressure on struggling governments, forecast a “significant economic downturn across the region.”
The Energy Department may report on Dec. 14 that gasoline supplies rose 1 million barrels last week, according to the median estimate of 10 analysts in a survey by Bloomberg News. Stockpiles in the week ended Dec. 2 jumped 5.15 million barrels to 215 million, the biggest increase since Jan. 28. Demand, or deliveries to wholesalers, slipped 2.2 percent.
Distillate Inventories
Inventories of distillate fuel, including heating oil and diesel, probably gained 1 million barrels last week, according to the survey. Stockpiles rose 2.53 million barrels in the week ended Dec. 2 to 141 million, a five-week high, as production climbed to a record for the second straight week.
January-delivery heating oil fell 1.64 cents, or 0.6 percent, to settle at $2.8961 a gallon on the exchange. It was the fourth consecutive decline. Prices are up 14 percent this year.
About half of U.S. diesel and heating oil exports in September went to Europe, Energy Department data show. A weaker Europe threatens demand for diesel.
Regular gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.274 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
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