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Gasoline Advances on U.S. Labor Market Gains, Greek Debt Swap

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March 7 (Bloomberg) -- Gasoline rose for the first time in five days as American companies hired more workers and support increased for a Greek debt swap, boosting optimism that the European economy will improve.

Futures advanced as employment rose by 216,000 last month, according to figures from ADP Employer Services. Prices extended gains on optimism that an exchange of Greek bonds will go forward, helping to contain that country’s debt crisis.

“The ADP number is definitely a step in the right direction,” said Phil Flynn, vice president of research at PFGBest in Chicago.

Gasoline for April delivery rose 5.75 cents, or 1.8 percent, to settle at $3.2874 a gallon on the New York Mercantile Exchange. Prices have gained 22 percent this year, making gasoline the best performer in the Standard & Poor’s GSCI index of 24 commodities.

Investors with at least 58 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate in the exchange. The goal is to reduce the 206 billion euros of privately held Greek debt by 53.5 percent and turn the tide against the debt crisis that has roiled Europe for more than two years.

Stocks Rally

News of the Greek debt swap boosted equities and weakened the dollar, strengthening the investment appeal of commodities. The Standard & Poor’s 500 Index was up 0.6 percent at 2:38 p.m. in New York. The Dollar Index, a gauge of the currency against six major peers, fell 0.1 percent.

“Any news from Greece that is good enough to move equities up is good enough to move the oil market up,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.

The Labor Department will probably report on March 9 that payrolls, including government workers, rose by 210,000 in February and the unemployment rate held at 8.3 percent, based on the median forecast of economists surveyed by Bloomberg News.

A gauge of executives’ optimism in the world’s largest economy rose to 59.2 from January through March from 53.3 the prior period, according to a report issued today by Duke University/CFO Magazine. The managers plan to increase payrolls by 2.1 percent over the next 12 months, the biggest gain since mid-2006.

“The labor market news looks good and the dollar is giving up some of its gains,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Over the next few days we could attract investors who are looking forward to a spring rally in gasoline.”

Gasoline Stockpiles

The Energy Department reported that gasoline stockpiles fell 396,000 barrels last week to 229.5 million, a six-week low, as output dropped 3 percent. The inventory decline was less than the 1.6 million barrels estimated in a survey by Bloomberg News.

“The gasoline draw is disappointing because we’re supposed to go down this time of year,” Pursell said. “What that points to is continued low demand.”

Demand slipped 1.2 percent and consumption over the past four weeks was 7.8 percent below a year earlier, department data show. Total fuel use over the past four weeks was 6.1 percent below a year earlier.

Supplies of distillates, including heating oil and diesel, fell 1.94 million barrels last week to an 11-week low of 139.5 million as refiners cut production to the lowest level since May. Daily demand fell 3.5 percent from a week earlier, and on a four-week average was 7.6 percent below last year.

April-delivery heating oil rose 3.12 cents, or 1 percent, to $3.2194 a gallon on the exchange. Prices are up 9.7 percent this year.

Regular gasoline at the pump, averaged nationwide, fell 0.3 cent to $3.761 a gallon yesterday, according to AAA data. Prices have increased 15 percent this year, and are 7.2 percent higher than a year earlier.

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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