Gasoline dropped on concern that economic recovery in Europe and the U.S. may falter, reducing demand for the fuel.
Futures slipped 0.7 percent as a meeting of European Union and European Commission chiefs today was expanded to include discussions on Italy amid concern that the debt crisis in Greece may spread. A U.S. Labor Department report on July 8 showed job gains were the fewest in nine months.
“We know the demand for gasoline hasn’t been that strong and it’s lower demand that’s putting pressure on the gas prices today,” said Phil Flynn, vice president of research at PFGBest in Chicago.
Gasoline for August delivery dropped 2.21 cents to settle at $3.0705 a gallon on the New York Mercantile Exchange.
The jobless rate reached a 2011 high of 9.2 percent in June, according to the Labor Department. U.S. employers added 18,000 workers last month, while the median estimate in a Bloomberg News survey called for a gain of 105,000.
On a four-week average, gasoline consumption was 0.6 percent below a year earlier for the period ending July 1, according to the Energy Department.
Regular gasoline at the pump rose 0.4 cent to $3.631 a gallon yesterday, the sixth consecutive increase, according to AAA data. The price has risen 6.9 cents since July 4.
President Barack Obama said he will continue to press congressional leaders for “the largest possible deal” on a package of significant deficit cuts.
Obama held a news conference before resuming bipartisan talks with congressional leaders toward a compromise on reducing budget deficits and raising the $14.3 trillion federal debt ceiling before the government exhausts its borrowing authority on Aug. 2.
“You also have the saga in Europe continues with an emergency meeting and Italy being the next peg to fall,” said Flynn. The deal to roll over the U.S. debt also “looks like it’s falling apart,” he said.
Gasoline traded as high as $3.1033 and heating oil touched $3.115 as Brent crude rallied to $118.40 a barrel. Nymex product futures delivered in New York Harbor can be affected by movements in Brent, since refineries on the U.S. East Coast process oil from West Africa and the North Sea that are priced versus the European benchmark.
There was no news to correlate with the jump in prices, said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.
Heating oil for August delivery fell 0.89 cent, or 0.3 percent, to $3.0875 a gallon on the exchange.