Gasoline Falls on Concern That Global Economic Growth Slowing

Gasoline slid a third consecutive day on concern that global growth is slowing after a report that Europe’s economy contracted in the fourth quarter.

Futures fell as Europe’s gross domestic product shrank 0.3 percent from the third quarter, the European Union’s statistics office said today. This follows reports yesterday that U.S. factory orders sank and China cut its economic growth outlook.

“There is no doubt the market is being held back by rising concerns about a global economic slowdown,” said Phil Flynn, vice president of research at PFGBest in Chicago.

Gasoline for April delivery declined 2.81 cents, or 0.9 percent, to settle at $3.2299 a gallon on the New York Mercantile Exchange. Prices have gained 20 percent this year, making gasoline the best-performing energy commodity in the Standard & Poor’s GSCI index of 24 raw materials.

In Europe, which is facing its second recession in less than three years, fourth-quarter exports fell 0.4 percent while household spending slipped 0.4 percent and investment dropped 0.7 percent.

The European Union today offered to restart negotiations with Iran over its nuclear program, seeking a “full settlement” of the clash that has pushed up oil prices and raised the specter of war in the Middle East.

‘Rising Uncertainty’

“It looks like rising economic uncertainty is putting a negative tone into the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “And now the European Union says it’s willing to reopen negotiations with Iran about nuclear issues.”

U.S. stockpiles of gasoline probably fell 1.6 million barrels last week, based on the median estimate of 10 analysts in a survey by Bloomberg News. That would be the third consecutive decline.

Distillate (DOEASDIS) inventories probably fell 1.65 million barrels, according to the survey. That would leave supplies at the lowest level since the week ended Dec. 16, Energy Department data show.

The department is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington.

April-delivery heating oil fell 2.92 cents, or 0.9 percent, to settle at $3.1882 a gallon on the exchange. Prices are up 8.6 percent this year.

Regular gasoline at the pump, averaged nationwide, slipped 0.3 cent to $3.764 a gallon yesterday, according to AAA data. That’s the first decline since Jan. 24. Prices have increased 15 percent this year, and are 8.7 percent higher than a year earlier.

Price Outlook

Regular-grade gasoline will average $3.79 a gallon this year, the highest level in data going back to 1976, and $3.72 in 2013, the department’s Energy Information Administration said today in its monthly Short-Term Energy Outlook. The EIA said last month that prices would average $3.55 in 2012 and $3.59 next year.

“The amount that gasoline prices have risen over the past year has been fairly astounding,” said Sander Cohan, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts.

Prices during the April-through-September peak driving season will average $3.925 a gallon, 5.7 percent higher than a year ago, the department estimated.

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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