Gasoline slipped after crude fell as Europe’s service and manufacturing sectors contracted and debate over a bailout for Cyprus threatened the euro region’s economic stability.
Futures retreated 1.5 percent as the European Central Bank threatened to cut emergency funds to Cyprus banks and euro-area services and manufacturing output contracted more than economists estimated in March. In the U.S., first-time jobless claims increased less than forecast last week and sales of existing homes climbed in February to a three-year high.
“The jobs numbers were good but the European data is weighing on the market because it reiterates the fact that the problems in Europe are larger than Cyprus,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Gasoline for April delivery fell 4.57 cents to $3.0706 a gallon on the New York Mercantile Exchange. Trading volume was 0.5 percent below the 100-day average for the time of day.
Prices have declined 2.9 percent this week. April’s premium to May futures narrowed 0.34 cent to 1.09 cents a gallon and its premium to the September contract fell 1.58 cents to 19.3 cents.
Futures were pressured as Brent crude, the pricing basis for gasoline imports, dropped $1.25 to $107.47 a barrel on the ICE Futures Europe exchange, and West Texas Intermediate oil on Nymex retreated $1.05 to $92.45.
A composite index based on a survey of European purchasing managers fell to 46.5 from 47.9 in February, London-based Markit Economics said today. Economists had forecast a reading of 48.2, according to the median of 23 estimates in a Bloomberg survey. A reading below 50 indicates contraction.
Applications for U.S. jobless benefits increased by 2,000 to 336,000 in the week ended March 16, Labor Department figures showed today. Economists projected 340,000 claims, according to the median estimate in a Bloomberg survey. The monthly average, which smooths the week-to-week volatility, dropped to the lowest level since February 2008.
The May crack spread versus WTI narrowed 72 cents to $36.06 a barrel on indications that U.S. refineries are beginning to return from seasonal maintenance and will be building supplies for the summer driving season.
The Energy Information Administration reported yesterday that refiners processed the most oil in two months in the seven days ended March 15. Gasoline demand, measured by deliveries to wholesalers, fell to 8.32 million barrels a day, the lowest level since Jan. 11.
“It’s a combination of weaker demand and improving supplies,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London. “U.S. refineries are coming out of maintenance. I would expect gasoline to be on a downtrend for some time.”
Heating oil for April delivery rose 0.42 cent to settle at $2.8963 a gallon on volume that was 14 percent below than the 100-day average for the time of day.
Gasoline at the pump, averaged nationwide, fell 0.6 cent to $3.691 a gallon, AAA said today on its website. Prices have dropped 9.5 cents since reaching a 2013 high of $3.786 on Feb. 26 and are 17.3 cents below a year ago.