Nov. 1 (Bloomberg) -- Heating oil slipped as concern increased that Greece will default on its debt, sending the region into recession.
Futures sank as Greek Prime Minister George Papandreou called for a referendum on a new bailout package, threatening the region’s stability if the plan is defeated. The euro sank 1.1 percent against the dollar, reducing the investment appeal of commodities priced in the U.S. currency.
“There’s trepidation Papandreou is backing away from the deal with the EU and the public will reject it and Greece will default with negative ramifications for the European economy,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
December-delivery heating oil declined 2.04 cents, or 0.7 percent, to settle at $3.0379 a gallon on the York Mercantile Exchange. Prices rose 8.9 percent in October, the biggest monthly gain since December.
The Greek vote “dramatically raises the stakes for Greece and the euro zone as a whole,” Fitch Ratings said in a statement today, adding that the referendum increases the risk of a “disorderly” default.
German Chancellor Angela Merkel and French President Nicolas Sarkozy held emergency talks on Greece today and called on Europe to implement the package of measures thrashed out in Brussels last week.
The drop in petroleum products was part of a broader decline in commodities and equities today. The S&P GSCI Index of 24 raw materials fell 1 percent at 3:21 p.m. in New York and the Standard & Poor’s 500 stock index retreated 2.4 percent.
“All this uncertainty is all Europe related and the feeling is there could be a little more downside,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.
Gasoline for December delivery rose 1.87 cents, or 0.7 percent, to settle at $2.6244 a gallon, after touching a low of $2.5336. Prices rose 0.6 percent in October after falling the previous two months.
“Inventories are expected to fall,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
The Energy Department will probably report tomorrow that gasoline supplies decreased 800,000 barrels last week, according to the median estimate of 13 analysts in a survey by Bloomberg News. Stockpiles of distillates dropped 1.75 million barrels.
Regular gasoline at the pump, averaged nationwide, fell 0.6 cent to $3.437 a gallon yesterday, according to AAA data.
--With assistance from Jennifer Ryan in London and Rebecca Christie in Brussels. Editors: David Marino, Charlotte Porter
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