Gasoline slid to a three-month low on concern that Europe’s debt crisis will worsen, curbing fuel use, after Greece failed to form a new coalition government and German Chancellor Angela Merkel’s party lost a key election.
Futures sank 1.4 percent as Greece headed toward a possible exit from the euro area. Merkel’s Christian Democratic Union lost a regional election to the main opposition Social Democratic Party. Industrial output slowed in Europe and China.
“The global economy is slowing, even China,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “The elections in Europe are causing a big level of uncertainty and fear the austerity measures that have been negotiated are starting to unravel. It’s all a mess.”
Gasoline for June delivery fell 4.18 cents to $2.959 a gallon on the New York Mercantile Exchange. That’s the lowest settlement since Feb. 7.
The dollar rose as much as 0.7 percent against the euro to the highest level in almost four months. A stronger dollar curbs the investment appeal of commodities. The Standard & Poor’s 500 (SPX) Index dropped 0.8 percent at 2:57 p.m. in New York.
Gasoline has lost 13 percent since reaching a 2012 high of $3.4166 on March 26. In that same period, futures pared their year-to-date gain to 10 percent from 27 percent.
“The market is under pressure due to signs of a slowing economy in China and European sovereign debt concerns, starting with Greece,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Greek President Karolos Papoulias failed to secure agreement on a unity government as Greece’s biggest anti-bailout party, Syriza, defied overtures to join the government yesterday.
Merkel’s party loss in Germany’s most populous state helped the Social Democrats tighten their grip on the country’s regional governments and raised concern about austerity measures supported by Merkel.
Production in the 17-nation euro area slipped 0.3 percent in March from February, when it advanced 0.8 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a gain of 0.4 percent, the median of 34 estimates in a Bloomberg News survey showed. In the first quarter, industrial output fell 0.5 percent.
In China, factory production grew 9.3 percent in April, the least since 2009. Indian inflation accelerated in April, with the benchmark wholesale-price index rising 7.23 percent from a year earlier, the Ministry of Commerce and Industry said in a statement in New Delhi today.
“There’s no clarity anywhere,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “The Chinese and Indian numbers were really weak, the Greeks can’t decide what they want to order for lunch and Germany is showing cracks. The stock market is falling and the dollar is strong.”
Regular gasoline at the pump, averaged nationwide, fell 0.1 cent to $3.727 a gallon yesterday, according to AAA. That’s the lowest level since Feb. 27. Prices are down 20.9 cents since reaching a 2012 high of $3.936 on April 4. Gasoline peaked in 2011 at $3.985 on May 4.
June-delivery heating oil declined 3.41 cents, or 1.2 percent, to $2.9295 a gallon on the exchange, the lowest settlement since Dec. 29. Prices have lost 0.2 percent this year, after gaining 13 percent through Feb. 24.
To contact the reporters on this story: Barbara J Powell in Dallas at firstname.lastname@example.org
To contact the editor responsible for this story: Dan Stets at email@example.com.