Gasoline fell as Japan’s sovereign- credit rating was lowered and the Organization for Economic Cooperation and Development said Europe’s debt crisis risks damaging the global economy.
Futures declined as Fitch Ratings cited limited progress by Japan in addressing its public debt for the one-step downgrade to A+ with a negative outlook. The OECD, which advises its 34- member nations on economic policy, left the group’s 2012 forecast unchanged while reducing its outlook for the euro area.
“The downgrade for Japan was bearish,” said Phil Flynn, vice president of research at PFGBest in Chicago. “June crude is also going off the board today and contributing to volatility.”
Gasoline for June delivery fell 0.31 cent to settle at $2.937 a gallon on the New York Mercantile Exchange, the first loss in three days.
A worsening of Europe’s sovereign debt crisis “may materialize and spill over outside the euro area with very serious consequences for the global economy,” OECD Chief Economist Pier Carlo Padoan wrote in the organization’s semiannual report on the global economy.
“In the back of people’s heads, they’re worried about Europe and demand destruction,” said Fred Rigolini, vice president of Paramount Options Inc. in New York.
The remarks come as European Union leaders are preparing to gather in Brussels tomorrow to discuss how to revive growth and address a political impasse in Greece, where voters rejected austerity measures in elections on May 6.
Futures rose earlier as a leading economic index for China rose at the same pace in April as the prior month, increasing optimism that the world’s second-biggest economy may avoid a deeper slowdown. The gauge climbed 0.8 percent from March to 232.4, the New York-based Conference Board said.
The report comes a day after China’s Premier Wen Jiabao pledged to focus more on bolstering growth, easing concern the world’s second-largest economy is slowing.
“The China news is supporting,” Flynn said.
In Europe, U.K. inflation slowed more than forecast in April, with consumer prices rising 3 percent from a year earlier, down from 3.5 percent in March, the Office for National Statistics said. European leaders will do “everything necessary” to keep Greece in the 17-nation euro currency system and focus on steps to aid economic expansion, German Finance Minister Wolfgang Schaeuble said yesterday.
“It’s a mixed bag of news out of Europe and the downgrade of Japan by Fitch and the OECD are negative factors,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Gasoline demand rose 1.2 percent in the week ended May 11 and supplies fell to the lowest since November even as refiners boosted utilization rates 1.9 percentage points to 88.3 percent, according to Energy Department data. Gasoline exports averaged 411,000 barrels a day, more than double the 200,000-barrel-a-day average from a year earlier.
The department will probably report tomorrow that stockpiles fell 650,000 barrels last week, according to the median estimate of 12 analysts in a survey by Bloomberg news. Refinery rates increased 0.3 percentage point.
“We’re calling for across-the-board declines in inventories,” McGillian said. “If they continue to increase refinery utilization and we continue to see falling product inventories, it seems there may be stronger export demand than people had projected.”
Regular gasoline at the pump, averaged nationwide, fell 0.9 cent to $3.68 a gallon yesterday, according to AAA. It was the lowest level since Feb. 24. Gasoline is down 6.5 percent since reaching a 2012 high of $3.936 on April 4.
Diesel and heating oil supplies probably sank 500,000 barrels, according to the survey. Demand for heating oil and diesel shrank 7.8 percent to 3.65 million barrels a day in the week ended May 11, according to department data. Inventories slipped 969,000 barrels to 119.8 million, the lowest level since June 2008.
June-delivery heating oil rose 0.11 cent to settle at $2.8614 a gallon on the exchange.
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