Gasoline Falls on Concern Europe’s Debt Crisis Worsening

Gasoline fell a second day on concern that Europe’s fiscal crisis is worsening as euro-area manufacturing contracted and Moody’s Investors Service cut the credit outlook for Germany.

Futures declined as Moody’s, after the U.S. market closed yesterday, said it cut Germany’s, the Netherlands’ and Luxembourg’s Aaa credit rating outlooks to negative, citing “rising uncertainty” about Europe’s debt crisis. Euro-area services and manufacturing output declined for a sixth month in July, adding to signs of a deepening economic slump.

“Their manufacturing number came in less than expected,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The situation in Europe continues to be bleak.”

August-delivery gasoline fell 5.81 cents, or 2 percent, to settle at $2.8248 a gallon on the New York Mercantile Exchange. The more actively traded September contract lost 3.8 cents to $2.7258 a gallon.

August gasoline widened losses on speculation that a fluid catalytic cracker at Sunoco Inc.’s Philadelphia plant won’t be down as long as originally thought. Information provider IIR Energy said in a report yesterday that Sunoco was forced to shut the unit for unplanned work and the unit was expected to be repaired and restarted within two weeks.

New York Gasoline

Conventional 87-octane gasoline for spot delivery in New York Harbor, the delivery point for Nymex contracts, weakened 4.57 cents to 16.45 cents below futures, according to data compiled by Bloomberg. That’s the lowest level since June 28.

“Yesterday, the Sunoco story got gasoline going,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York. “Today, people are thinking it might not be that big a deal.”

Moody’s cited the risk that Greece will leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy.

A composite index based on a survey of purchasing managers in services and manufacturing in the region was unchanged at 46.4, the same level as in June, London-based Markit Economics said today in an initial estimate. A reading below 50 indicates contraction.

“The negativity coming from Europe is the primary price driver right now,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

August-delivery heating oil rose 0.55 cent to $2.8244 a gallon, after earlier falling as low as $2.7968. The more actively traded September contract gained 0.57 cent to $2.8263.

BP Whiting

Heating oil gained after a report that BP Plc’s Whiting refinery in Indiana, the largest plant serving the Chicago market, had a fire in a coker drum that reduced crude runs and threatened to keep the coker shut for as long as two weeks.

The premium to futures for ultra-low sulfur diesel for prompt delivery in Chicago widened 4.5 cents to 9.5 cents after the report.

“Everybody quit selling, they just want to buy,” said Lewis Adam, president of ADMO Energy LLC, a supply consultant in Kansas City, Missouri.

Regular gasoline at the pump, averaged nationwide, increased 0.6 cent to $3.477 a gallon, according to AAA. Prices are the highest since June 19, and are down 12 percent from a year-to-date high of $3.936 on April 4.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE