Gasoline fell from an eight-week high on concern that Europe’s debt crisis, slower growth in China and a stagnant U.S. economy will reduce fuel demand.
Futures slid as the euro declined against the dollar after Spanish Prime Minister Mariano Rajoy abandoned his forecast for a return to growth next year. A report indicated that China may be reluctant to lower interest rates. U.S. economic reports yesterday showed weakness in the labor and housing markets.
“This may have reignited worries about Europe,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The rally was getting overextended. Yesterday’s U.S. economic data was bad and if the dollar continues to rally, it puts the market under more pressure.”
August-delivery gasoline sank 3.19 cents, or 1.1 percent, to $2.907 a gallon at 9:55 a.m. on the New York Mercantile Exchange, after settling yesterday at the highest level since May 21.
The euro fell 1 percent against the dollar at 9:52 a.m. in New York, the lowest level since June 14, 2010.
China won’t relax property control policies and will instead seek to keep a “firm grip” on the real estate market to prevent a rebound in housing prices, Xinhua News Agency said, citing a government circular.
“Perhaps the Chinese government may be hesitant to lower interest rates more because that may inflate the property bubble,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Labor Department figures yesterday showed jobless claims rose 9.7 percent last week, the biggest percentage gain since Jan. 25, 2008. Existing home sales fell 5.4 percent, data from the National Association of Realtors showed.
August-delivery heating oil declined 3.4 cents, or 1.2 percent, to $2.913 a gallon, the first loss in eight days.
Regular gasoline at the pump, averaged nationwide, increased 1 cent to $3.447 a gallon, according to AAA. Prices are the highest since June 21 after rising every day but two since July 1, gaining 12.1 cents. Gasoline reached a year-to- date high of $3.936 on April 4.
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