Gasoline and heating oil futures slipped as increasing Spanish borrowing costs indicated concern that Europe’s debt crisis may widen, threatening economic growth and fuel demand.
Futures fell as the Spanish 10-year bond yield rose to a euro-era record of 7.13 percent. Greece’s New Democracy and Pasok parties won enough seats yesterday to form a majority in the 300-member parliament, according to an official projection, easing concern that the country will reject implementing austerity measures.
“Just because Greece decides to be pro-euro doesn’t solve all the problems,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Spanish borrowing costs have increased and there’s still a possibility of more difficulties from Greece, he said.
Gasoline for July delivery fell 4.08 cents, or 1.5 percent, to settle at $2.6609 a gallon on the New York Mercantile Exchange. It;s the biggest drop in two weeks.
To form a parliamentary majority, Greece’s two traditional political rivals, New Democracy, led by Antonis Samaras, and the Socialist Pasok party, led by Evangelos Venizelos, must form a coalition.
Heating oil for July delivery fell 2.88 cents, or 1.1 percent, to $2.6177 a gallon.
Regular gasoline at the pump, averaged nationwide, fell 0.4 cent to $3.505 a gallon yesterday, according to AAA. It was the lowest price since Feb. 9.
Group of 20 leaders are gathering in Los Cabos, Mexico, for a summit being dominated by the crisis in the 17-nation euro region that threatens to further erode the weakest global economy since the 2009 recession.
President Barack Obama, who has blamed the crisis for a slowdown in U.S. employment growth, is due to hold talks with German Chancellor Angela Merkel at the meeting, a White House official said. Merkel will then join fellow euro-area leaders for more talks with Obama this evening.
Merkel, who last week criticized U.S. debt levels, said June 15 that she’ll press the G-20 to hold to prudent government spending.