Gasoline Surges as European Leaders Alleviate Debt Crisis Fears
Gasoline surged the most since March after European leaders eased repayment rules for Spanish banks, alleviating concern that the region’s debt crisis will spread and curb fuel demand.
Futures rose as much as 3.1 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.
“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 7.02 cents, or 2.7 percent, to $2.6844 a gallon at 9:51 a.m. on the New York Mercantile Exchange, after touching $2.695. Prices have fallen 5 percent this month and are down 21 percent in the quarter. The contract is for reformulated gasoline, or RBOB. The August contract advanced 7.66 cents, or 3.1 percent, to $2.5539.
Heating oil for July delivery rose 9.44 cents, or 3.7 percent, to $2.6463 a gallon. Prices touched $2.6526, the biggest one-day gain since July 7, 2011. Prices have lost 2.2 percent this month and are down 16 percent since March 30. The more actively traded August contract gained 9.54 cents, or 3.8 percent, to $2.6426.
Heating oil and gasoline contracts for July delivery will expire 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 broad recovery. Crude oil for August delivery rose $3.92, or 5.1 percent, to $81.61 a barrel on the Nymex. The Standard & Poor’s 500 Index jumped 1.5 percent at 9:55 a.m. in New York.
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.