Gasoline surged the most since October after European leaders eased repayment rules for Spanish banks, alleviating concern that the region’s debt crisis will spread and curb fuel demand.
Futures jumped 4.3 percent as leaders of the 17 euro countries dropped requirements that governments get preferred creditor status on aid to Spain’s banks and opened the way to recapitalize lenders directly with bailout funds. The dollar fell the most against the euro since October, increasing the investment appeal of commodities, crude oil in New York surged 9.4 percent and global stocks rose the most this year.
“It appears our old friend ‘Rosy Scenario’ has returned to the energy markets,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Expectations for this summit were so low any news of a positive nature would cause a bid to come back into the market. All they did was lower temperatures. They haven’t solved the problem.”
July-delivery gasoline rose 11.3 cents to $2.7272 a gallon on the New York Mercantile Exchange, the highest settlement since May 29.
Prices have fallen 3.5 percent this month and 20 percent in the quarter, making the motor fuel the third-worst performing commodity since March 30 on the Standard & Poor’s GSCI Spot index of 24 materials. After gaining as much as 27 percent through March 26, gasoline is up 1.5 percent this year.
The August contract advanced 15.45 cents, or 6.2 percent, to $2.6318 a gallon.
Heating oil and gasoline contracts for July delivery expired at the close of floor trading today.
“Today is last day of the quarter,” Armstrong said. “Energy markets were extremely beat up this quarter and, if you were short, you’ve been extremely successful. It’s time to book those profits.”
Euro leaders at a summit in Brussels also relaxed the conditions for possible aid to Italy.
Futures’ gains were part of a broader recovery. Crude oil for August delivery rose $7.27 to $84.96 a barrel on the Nymex, the biggest gain since March 2009. The Standard & Poor’s 500 Index jumped 2.5 percent. The GSCI rose 5.5 percent, the biggest gain since April 2009.
“We’re up on knee-jerk reaction,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Every time there’s some saving news out of Europe it relieves the anxiety, but not the reality that global economies are slowing down and that is going to put the cap on many commodities.”
Today’s rally in gasoline and heating oil trimmed the largest quarterly loss for oil products since the last three months of 2008. Prices dropped since the end of March on concern that the U.S. economic recovery was stalled, growth in China was slowing and Europe’s economy would weaken further.
“Expectations for the European Union summit were virtually nonexistent so the fact that they came to some agreement was quite bullish for the oil market,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “People are going to now look at what the details are in the agreement and whether they translate into as much euphoria as the headlines.”
Heating oil’s discount to gasoline narrowed 3.11 cents to 3.12 cents as distillate demand jumped 9.2 percent to a four-week high last week and stockpiles fell to 16 percent below year-earlier levels.
Refinery utilization rose 0.7 percentage point to 92.6 percent, the highest level since July 2007 as refiners raised gasoline output 2.9 percent while reducing distillate production by 4.1 percent.
Heating oil for July delivery rose 14.41 cents, or 5.7 percent, to $2.696 a gallon, the biggest gain since July 30, 2009. Prices sank 0.4 percent this month and 15 percent during the quarter. Futures are down 8.1 percent this year.
The more actively traded August contract gained 16.27 cents, or 6.4 percent, to $2.7099 a gallon.
Regular gasoline at the pump, averaged nationwide, fell 1.6 cents to $3.353 a gallon yesterday, according to AAA. It was the lowest level since Jan. 5.