Bloomberg News

Gasoline Gains on ECB’s Debt Crisis Comments, Weaker Dollar

October 06, 2011

Oct. 6 (Bloomberg) -- Gasoline gained as the European Central Bank outlined a strategy to shield regional banks from a potential Greek default and the dollar weakened.

Futures, in the largest two-day rally since May 10, rose as European Central Bank President Jean-Claude Trichet said the ECB will resume covered-bond purchases and reintroduce year-long loans as the sovereign debt crisis threatens to lock money markets. The U.S. currency erased an earlier gain against the euro, increasing the investment appeal of commodities, and equities reversed losses.

“They threw some things on the table for consideration in Europe and you’re looking at some positive runs in the equities,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.

Gasoline for November delivery rose 11.68 cents, or 4.6 percent, to settle at $2.686 a gallon on the New York Mercantile Exchange. Prices have gained 7.9 percent in two days.

Futures extended gains as Sunoco Inc. shut units at its Marcus Hook refinery near Philadelphia, said two people with knowledge of the maintenance. The maintenance is occurring as gasoline imports last week slipped to the lowest level since at least 2004 and ConocoPhillips idled its Trainer, Pennsylvania, plant while it seeks a buyer.

Gasoline imports to the U.S. East Coast fell last week to the lowest level since at least 2004, when the Energy Department began reporting regional data. November futures increased to a 7.75-cent premium over December contracts.

ECB Move

The European Central Bank’s move to keep euro-area banks afloat is buying governments more time to recapitalize them as Greece edges closer to default. German Chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized.

“Some of the fears we saw earlier in the week seem to have abated,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

The Standard & Poor’s 500 Index rose 1.2 percent at 2:45 p.m. The dollar lost 0.7 percent against the euro after earlier rising as much as 0.8 percent.

“Maybe the downtrend is over but we have to wait for tomorrow’s jobs data,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Employers added 59,000 workers to payrolls in September and the unemployment rate held at 9.1 percent, according to the median forecast of economists before tomorrow’s jobs report. The Labor department reported today that applications for jobless benefits increased by 6,000 in the week ended Oct. 1 to 401,000.

Heating oil for November delivery rose 8.45 cents, or 3 percent, to settle at $2.8611 a gallon, the highest settlement since Sept. 27.

Regular gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.392 yesterday, according to AAA data. That’s the cheapest since March 1.

--With assistance from Timothy Homan in Washington, Gabi Thesing in London and Jeff Black in Frankfurt. Editors: David Marino, Charlotte Porter

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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