Oct. 26 (Bloomberg) -- Gasoline slid in New York on concern that European leaders meeting at a debt crisis summit have reached an impasse and as the Energy Department reported that fuel demand fell to the lowest since January 2004.
Futures sank after European Union talks with banks on bondholder losses as part of a second Greek bailout were deadlocked, an EU official said, lessening the chances to contain a debt crisis threatening the region’s economy and global recovery. Deliveries of the motor fuel to wholesalers declined 1.1 percent to 8.5 million barrels a day.
“It’s all Europe,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “We’re on tenterhooks waiting to see which shoe will drop.”
Gasoline for November delivery fell 4.82 cents, or 1.8 percent, to settle at $2.6516 a gallon on the New York Mercantile Exchange. It was the first decline in five days. The more actively traded December contract lost 4.94 cents to $2.6253 a gallon.
French President Nicolas Sarkozy and German Chancellor Angela Merkel want to meet Greek creditors in Brussels tonight on the sidelines of a European summit to break a deadlock of the terms of a debt writedown, said a person familiar with the matter.
The Greek deadlock darkens the summit’s prospects, since deals on recapitalizing banks and bolstering the 440 billion- euro ($608 billion) rescue fund hinge on steering debt-laden Greece back toward financial health. In Italy, Prime Minister Silvio Berlusconi has yet to meet European Union demands to deliver a comprehensive plan to boost growth and tame a $2 trillion debt in that country.
“There’s real fears they really don’t have anything to agree on in Europe and Silvio Berlusconi’s government is in trouble, which is a much bigger story than Greece,” said Ray Carbone, president of Paramount Options Inc. in New York and a trader at the Nymex.
On a four-week average, gasoline consumption was 2.7 percent below a year earlier. Total fuel use was down 0.7 percent from the previous year.
Inventories of the motor fuel dropped 1.35 million barrels to 204.9 million in the week ended Oct. 21, the government said. The median estimate of 12 analysts surveyed by Bloomberg News called for a 1.75 million-barrel decrease.
“The erosion in demand offsets the product draws,” said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC in Houston. “This report was not enough to get you to move one way or the other. We’re probably still in a holding pattern waiting on Greece.”
Heating oil and diesel inventories dropped 4.28 million barrels last week to 145.5 million, the lowest level in 15 weeks and largest decline since Nov. 5. Analysts forecast a 2 million- barrel decrease, according to the survey. Supplies were down 14 percent in the past year, according to department data.
Demand for industrial, trucking and home-heating fuels rose 1.6 percent to 4.25 million barrels a day, the most since November. On a four-week average, consumption was 7.5 percent higher than a year earlier.
“Distillate is the silver lining on the demand side,” Pursell said.
November-delivery heating oil slipped 3.44 cents, or 1.1 percent, to settle at $3.0158 a gallon on the exchange. The December contract declined 3.02 cents to $3.021.
Regular gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.441 a gallon yesterday, according to AAA data.
--With assistance from Helene Fouquet in Paris, James G. Neuger and Patrick Henry in Brussels and Flavia Rotondi and Lorenzo Totaro in Rome. Editors: David Marino, Richard Stubbe
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