Gasoline sank to the lowest level in 10 weeks as declines in Europe’s services and manufacturing sectors highlighted the toll the sovereign debt crisis has wrought on the region’s economy.
Futures slid 2.4 percent as a composite index based on a survey of manufacturing and services purchasing managers fell to 46.1 from 46.3 in August, London-based Markit Economics said today. The Energy Department reported that gasoline demand fell last week and refinery rates increased.
“The oil market is under pressure due to continued concern about the European sovereign debt crisis,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for November delivery fell 6.97 cents to $2.7995 a gallon on the New York Mercantile Exchange, the lowest settlement since July 25.
China’s services industry grew the least in more than a year. The purchasing managers’ index fell to 53.7 in September from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing today. Readings above 50 indicate expansion.
“The market still has to overcome weakness we’re seeing in China and the concerns about Spain asking for a handout,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Gasoline demand fell last week, imports rose and refinery output increased, leading to speculation that stockpiles will expand as plants return from maintenance and unplanned repairs. Supply may also grow as pumps switch over to winter grade fuel, which can be produced from more widely available components.
“Turnarounds are going to end, you have the switchover to winter grade, and demand is not particularly good,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston.
Delta Airlines Inc. said today that the 185,000-barrel-a-day Trainer plant in Pennsylvania, idled a year ago by former owner ConocoPhillips, will be at full rates this week. That refinery supplies the East Coast, which includes New York Harbor, the delivery point for Nymex futures.
Wholesale gasoline demand slipped 1.6 percent to 8.63 million barrels a day, and over the past four weeks was 2.5 percent below a year earlier.
Gasoline output rose 2 percent to 9.11 million barrels a day. Imports into the East Coast rose 15 percent to 542,000 barrels a day, after falling the prior week to the lowest seasonal level in department data going back to 2004.
“The bearishness is probably from stronger refinery runs because the fundamentals in today’s report aren’t particularly bearish,” said Sander Cohan, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts. “There’s more supplies coming down the pike, and you do have a strong crack spread” to attract more production.
Stockpiles in the mid-Atlantic region, including New York, fell 5.1 percent last week to 20.4 million barrels, the lowest level in weekly data going back to 1990.
The premium of gasoline over West Texas Intermediate crude oil, or the crack spread, which gives an indication of the profit refiners may earn from making fuel, reached $30.45 a barrel at the end of September, more than three times the $8.51 average of the past five years, encouraging refiners to boost output.
The spread increased 82 cents today to $29.44 a barrel.
November-delivery heating oil fell 5.91 cents, or 1.9 percent, to settle at $3.0664 a gallon on the exchange.
Inventories of distillates, which include heating oil and diesel, fell 3.69 million barrels to 124.1 million, the lowest level in eight weeks and 21 percent below a year earlier. Demand jumped 10 percent to 4.09 million barrels a day, the highest level since December.
Regular gasoline at the pump, averaged nationwide, rose 0.2 cent to $3.782 a gallon yesterday, AAA data show. It was the first increase in eight days.