Bloomberg News

Gasoline Falls on Concern Europe’s Debt Crisis Worsening

July 24, 2012

Gasoline fell on concern that Europe’s fiscal crisis is worsening as euro-area manufacturing contracted and Moody’s Investors Service cut the credit outlook for Germany.

Futures declined as Moody’s, after the U.S. market closed yesterday, said it cut Germany’s, the Netherlands’ and Luxembourg’s Aaa credit rating outlooks to negative, citing “rising uncertainty” about Europe’s debt crisis. Euro-area services and manufacturing output declined for a sixth month in July, adding to signs of a deepening economic slump.

“Their manufacturing number came in less than expected,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The situation in Europe continues to be bleak.”

August-delivery gasoline fell 2.05 cents, or 0.7 percent, to $2.8624 a gallon at 9:55 a.m. on the New York Mercantile Exchange. The more actively traded September contract lost 1.05 cents to $2.7533 a gallon.

Moody’s cited the risk that Greece will leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy. A composite index based on a survey of purchasing managers in both industries in the region was unchanged at 46.4, the same level as in June, London-based Markit Economics said today in an initial estimate. A reading below 50 indicates contraction.

Pare Losses

Futures pared losses after touching $2.8397 as the dollar narrowed gains against the euro and a gauge of U.S. manufacturing showed the sector still expanding while growth has slowed. The U.S. Preliminary Markit Purchasing Managers survey conducted by Markit showed a July reading of 51.8, down from 52.5 in June. A reading above 50 signals expansion.

The euro was down 0.1 percent against the dollar at 9:57 a.m. in New York after sinking as much as 0.3 percent. A stronger dollar reduces the appeal of commodities as an alternative investment.

“The euro is not down as much as it was,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “For last three days in a row, prices have been strictly driven by Europe, the declining euro and rising dollar.”

August-delivery heating oil rose 0.15 cent to $2.8204 a gallon, after falling as low as $2.7968. The more actively traded September contract gained 0.25 cent to $2.8231.

Regular gasoline at the pump, averaged nationwide, increased 0.6 cent to $3.477 a gallon, according to AAA. Prices are the highest since June 19, and are down 12 percent from a year-to-date high of $3.936 on April 4.

To contact the reporters on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus