Bloomberg News

Gasoline Declines as Moody’s Announces European Ratings Review

December 13, 2011

Dec. 12 (Bloomberg) -- Gasoline declined on concern that the euro-area economy will falter, threatening global recovery, as Moody’s Investors Service announced a review of debt ratings for countries in the region.

Futures fell as equities slid and the dollar surged after Moody’s said last week’s EU summit failed to yield “decisive policy measures” to contain the region’s debt crisis. In the U.S., gasoline supplies are at the highest level since July, according to Energy Department data.

“The market is trading like Europe is going to collapse tomorrow,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, said by phone. “U.S. macroeconomic data has been good for a month and it hasn’t made a difference.”

Gasoline for January delivery fell 1.72 cents, or 0.7 percent, to $2.5789 a gallon at 1:07 p.m. on the New York Mercantile Exchange. Gasoline has gained 5.1 percent in 2011.

The dollar gained 1.4 percent against the euro at 1:08 p.m. in New York, reducing the investment appeal of commodities. The MSCI World Index fell 2 percent.

“Money is running back into the dollar again and pushing all these commodities down,” Michael Smith, president of T&K Futures & Options in Port Saint Lucie, Florida, said by phone.

Gasoline’s decline was part of a broader slide in commodities. The S&P GSCI Index of 24 raw materials fell 1.2 percent at 1:20 p.m. in New York.

’Few New Measures’

The agreement by European leaders to boost a rescue fund by $267 billion (200 billion euros) and tighten rules to curb future debts “offers few new measures,” Moody’s said today in an e-mailed statement.

“The market’s concern is that the result of this agreement will be less spending and more austerity, which will have a slowing effect on the economy,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said by phone. “Moody’s has added more bearish sentiment to the potential for growth.”

The Energy Department may report on Dec. 14 that gasoline supplies rose 1 million barrels last week, according to the median estimate of nine analysts in a survey by Bloomberg News. Stockpiles in the week ended Dec. 2 jumped 5.15 million barrels to 215 million, the biggest increase since Jan. 28. Demand, or deliveries to wholesalers, slipped 2.2 percent.

Inventories of distillate fuel, including heating oil and diesel, probably gained 1 million barrels last week, according to the survey. Stockpiles rose 2.53 million barrels in the week ended Dec. 2 to 141 million, a five-week high, as production reached a record high for the second straight week.

January-delivery heating oil fell 0.32 cent to $2.9093 a gallon on the exchange. It was the fourth consecutive decline. Prices are up 14 percent this year.

About half of U.S. diesel and heating oil exports in September went to Europe, Energy Department data show. A weaker Europe threatens demand for diesel.

Regular gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.274 a gallon yesterday, according to AAA data.

--With assistance from Andrew Davis in Rome. Editors: Richard Stubbe, 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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