Gasoline slid to a three-month low after the Kyodo News service reported that the U.S. called for a release of strategic oil reserves amid rising crude supplies and concern Europe’s debt crisis threatens fuel demand.
Futures sank a fifth straight day as the U.S. government called on other Group of Eight countries to prepare to release oil reserves, the news service reported, citing unidentified officials familiar with Japan-U.S. ties. U.S. crude supplies are the highest since 1990. The European Central Bank said it will temporarily stop lending to some Greek banks.
“If you throw more oil supplies into the market, it begs the question of how prices can move higher with slowing in China and problems in Europe,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.
Gasoline for June delivery fell 2.32 cents, or 0.8 percent, to $2.9209 a gallon on the New York Mercantile Exchange, the lowest settlement since Feb. 3.
Gasoline has lost 15 percent since reaching a 2012 high of $3.4166 on March 26. In that same period, futures pared their year-to-date gain to 8.7 percent from 27 percent.
Crude inventories climbed 2.13 million barrels last week to 381.6 million, the Energy Department reported today. Supplies at Cushing, Oklahoma, the delivery point for the Nymex futures contract, increased 1 million barrels to a record 45.1 million.
U.S. President Barack Obama will seek G-8 cooperation during a May 18-19 summit in Camp David, Maryland, with the aim of curbing oil price increases and showing solidarity on the topic of Iran, Kyodo said.
Greek President Karolos Papoulias was told by the nation’s central bank chief that Greeks have withdrawn as much as 700 million euros ($891 million) and the situation could worsen.
Greece’s Democratic Left leader Fotis Kouvelis said new elections will probably occur on June 17. The new voting in Greece will follow inconclusive May 6 elections that pushed a political party opposed to Greece’s international bailout into second place.
Papoulias’ failure to broker a governing coalition yesterday reignited concern that Greece will renege on pledges to cut spending as required by the terms of its two bailouts worth 240 billion euros ($306 billion) negotiated since May 2010, and, ultimately, will leave the 17-nation euro area.
“The turmoil continues,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Word of the election increases the risk of an exit from the euro-zone.”
U.S. gasoline demand in the week ended May 11 rose 1.2 percent to an average 8.97 million barrels a day, the highest since October, according to Energy Department data released today. Consumption over the past four weeks was down 2.6 percent versus a year earlier, narrower than the 3.2 percent drop the prior week.
Motor-fuel inventories sank 2.8 million barrels to 204.3 million, department data show.
“If the demand side continues to strengthen through the summer, you’ll ultimately pull inventories down,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.
Regular gasoline at the pump, averaged nationwide, rose 0.1 cent to $3.728 a gallon yesterday, according to AAA. It was the first increase since April 14. Prices are down 20.8 cents since reaching a 2012 high of $3.936 on April 4.
Demand for heating oil and diesel shrank 7.8 percent to 3.65 million barrels a day last week, Energy Department data show. Inventories slipped 969,000 barrels to 119.8 million, the lowest level since June 2008.
June-delivery heating oil fell 3.54 cents, or 1.2 percent, to settle at $2.8976 a gallon, the lowest settlement since Dec. 28. Prices have lost 1.3 percent this year.
Heating oil’s discount to June gasoline widened to 2.33 cents from 1.11 cents yesterday.
“We’re seeing demand pick up for gasoline and it’s offsetting that spread,” said Flynn.