Gasoline slid, reversing an earlier gain, on concern the European debt crisis will linger and U.S. lawmakers won’t reach consensus on how to avoid a looming so-called fiscal cliff, curbing growth and fuel demand.
Futures declined 0.9 percent as Euro-area finance ministers met today in Brussels to discuss aid to Greece, which may need further assistance from creditor nations. U.S. President Barack Obama plans to begin budget talks with Congressional leaders next week.
“There’s fears of the budget debate, uncertainty about how the Europeans are going to handle Greece,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Gasoline for December delivery fell 2.29 cents to settle at $2.6763 a gallon on the New York Mercantile Exchange.
Greece may need as much as 32.6 billion euros ($41 billion) in extra financing through 2016, putting pressure on a German-led bloc of creditors to make concessions in order to prevent a renewed flare-up of the European debt crisis.
Obama will hold meetings this week with labor and business leaders ahead of meetings with Congressional leaders next week on how to forestall $607 billion in automatic spending cuts and tax increases scheduled to take effect in January.
Prices touched $2.7468 earlier, the highest intraday level since Oct. 31, on concern that East Coast supplies may shrink as two refineries remain shut after Hurricane Sandy’s Oct. 29 landfall.
“The East Coast is still awaiting the restart of the Phillips 66 Bayway and Hess Port Reading refineries,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Now that demand has returned with the reopening of gas stations and the absence of long lines, the market will need to replenish that shortfall.”
MasterCard Inc. may say in its SpendingPulse report tomorrow that retail demand didn’t recover last week because of continued supply disruptions on the East Coast, John Gamel, a gasoline analyst and director of economic analysis for SpendingPulse, said in an interview Nov. 9.
Gasoline demand sank 2.4 percent in the week ended Nov. 2 to an eight-month low and might have fallen more, except the seven days covered in the report included the weekend before the storm, when drivers were filling their tanks, Gamel said.
“There’s concerns about Europe and concerns about demand still being weak after Hurricane Sandy,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
U.S. wholesale gasoline demand in the week ended Nov. 2 fell the most in Energy Department data since Jan. 7, 2005, after Sandy shut filling stations and kept drivers off the road. Inventories of gasoline in the East Coast, or Padd 1, slipped 1.25 million barrels to 46.6 million, 8.7 percent below a year earlier.
“You’re not really seeing strong national levels of demand,” McGillian said. “But we’re just over a week away from the Thanksgiving holiday with all the driving that goes into that.”
The U.S. Thanksgiving holiday is Nov. 22. AAA, the largest U.S. motoring organization, will release its projections tomorrow for travel during the four-day holiday period, which begins Nov. 22.
The average nationwide cost for regular gasoline fell 0.2 cent to $3.437 a gallon, AAA said today on its website. That’s the lowest level since July 18. The pump price reached a 2012 high of $3.936 on April 4.
Central Atlantic prices, which jumped after Sandy, are beginning to moderate, Michael Green, a spokesman for AAA in Washington, said today. The average in New Jersey has fallen for three straight days and Long Island prices are down for the first time since Oct. 29.
The only place in the region where prices aren’t moderating is New York City where the average rose 0.1 cent to $4.168 a gallon yesterday and has increased every day since Oct. 31, Green said.
December-delivery heating oil fell 0.63 cent to $2.9992 a gallon on the exchange.