Gasoline, Heating Oil Drop to 7-Month Low on Europe Debt Worry
Oct. 4 (Bloomberg) -- Gasoline and heating oil slid to the lowest levels since February on concern that European leaders can’t contain Greece’s debt crisis, threatening fuel demand and the global economic recovery.
Futures sank as European governments hinted that bondholders may be saddled with bigger losses on Greek debt. The Standard & Poor’s 500 Index of stocks fell 1.8 percent at 3:11 p.m. in New York.
“It’s just a continuation of concern that Greece’s debt crisis will spread and result in a slowdown of economic activity through Europe and then extend throughout the U.S. and Asia,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for November delivery dropped 2.26 cents, or 0.9 percent, to settle at $2.4884 a gallon on the New York Mercantile Exchange, the lowest level since Feb. 11.
Prices rose as high as $2.5289 after Federal Reserve Chairman Ben S. Bernanke said the central bank is prepared to act further to stimulate growth. Bernanke said the recovery has been less robust than hoped and is “close to faltering.”
Bernanke told a congressional committee that the Fed “will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability.” Prices slipped 1.7 percent earlier on concern the Greek debt crisis will spread.
“This sounds like another glimmer of hope, but temporary," said Fred Rigolini, vice president of Paramount Options Inc. in New York. ‘‘And stocks rallied.’’
European financial leaders are trying to bolster Greece’s economy, insulate Italy and Spain and shore up banks that the International Monetary Fund says face as much as 300 billion euros in credit risks.
‘‘All this doesn’t bode well for demand,” said Sander Cohan, an analyst with Energy Security Analysis Inc in Wakefield, Massachusetts. “There’s a lot of potentially bad economic news out there and a lot of anxiety over growth for next year.”
Prices slipped amid a broader decline in commodities. The S&P GSCI Index of 24 raw materials lost 1.8 percent at 3:20 p.m. in New York. Crude oil on the Nymex fell $1.94 to $75.67 a barrel. Brent oil for November settlement lost $1.92 to $99.79 on the London-based ICE Futures Europe exchange.
Heating oil for November delivery declined 2.95 cents, or 1.1 percent, to settle at $2.7234 a gallon, the lowest settlement for the front-month contract since Feb. 18.
Regular gasoline at the pump, averaged nationwide, fell 0.9 cent to $3.408 yesterday, according to AAA data. That’s the cheapest since March 1.
--With assistance from James G. Neuger and Jonathan Stearns in Luxembourg and Bob Willis and Scott Lanman in Washington. Editors: David Marino, Charlotte Porter
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