Oil dropped from the highest in almost two weeks in New York as investors bet that signs of a slowing global economy indicate fuel demand will falter.
Futures slid as much as 0. 7 percent today before reports which may show U. S. housing starts and building permits fell in July and European growth eased last quarter. Manufacturing in the New York region unexpectedly contracted in August for a third month, a report yesterday showed.
The U. S. economy is a little bit weaker than any of us were expecting at this time of the year and a lot of the indicators out of Europe have been weak as well, said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $93 a barrel in the third quarter. We all knew that it was going to take a long time for these areas to get back on their feet and there would be this lull in activity after all the stimulus had washed out.
Crude for September delivery fell as much as 65 cents to $87. 23 a barrel in electronic trading on the New York Mercantile Exchange and was at $87. 40 at 2:48 p. m. Sydney time. The contract yesterday gained 2. 9 percent to $87. 88, the highest settlement since Aug. 3. Prices are up 16 percent the past year.
Brent oil for September settlement declined 49 cents, or 0. 5 percent, to $109. 42 a barrel on the London-based ICE Futures Europe. The European benchmark contract was at a premium of $22. 06 to U. S. futures, compared with a record close of $23. 79 on Aug. 10.
Growth in China, the world s second-biggest oil consumer, is slowing significantly, according to The Conference Board, a New York-based research organization. The nation s expansion may cool to 9. 2 percent in the third quarter from 9. 5 percent in the previous three months, the China Securities Journal reported today, citing the State Information Center.
Builders in the U. S. , the world s biggest crude consumer, broke ground on 600,000 homes at an annual rate in July, a 4. 6 percent drop from June, according to the median estimate in a Bloomberg News survey of 77 economists before today s report. Building permits, a sign of future construction, probably fell 1. 9 percent. Economic growth in the eurozone dropped to 1. 8 percent in the second quarter from a year ago, the lowest expansion in more than a year, another survey showed.
The Federal Reserve Bank of New York s Empire State Index fell to minus 7. 7 from minus 3. 8 in July, a report showed yesterday. The median forecast in a Bloomberg News survey called for an index of zero, the dividing line between expansion and contraction. The bank s six-month outlook gauge dropped to the third-weakest level on record.
Standard & Poor s 500 Index futures declined 0. 4 percent following a three-day rebound in the U. S. stock gauge. Asian shares rose for a second day. The MSCI Asia Pacific Index increased 0. 6 percent as of 12:50 p. m. in Tokyo, extending yesterday s 2 percent rally.
An Energy Department report tomorrow may show U. S. crude oil stockpiles declined to a five-month low as imports fell and refineries ran near the highest rates of the year, according to a Bloomberg News survey.
Inventories dropped 750,000 barrels from 349. 8 million in the seven days ended Aug. 12, according to the median of 10 analyst estimates in the survey. The fall would leave stockpiles at the lowest since the week ended March 4.
Tropical Storm Gert turned north-northeast on a track away from Bermuda and the North American coast, according to the U. S. National Hurricane Center. Gert, with top winds of 60 miles (97 kilometers) per hour, was 135 miles east-southeast of Bermuda and moving north-northeast at 14 mph, it said in an advisory.
Courtesy: Bloom Berg
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