Oil Falls, Poised for Weekly Decline, on Weaker Global Economic Concern

Oil fell in New York, poised for its biggest weekly decline in four, on concern that faltering global economic growth will curtail a recovery in fuel demand.

Crude pared yesterday’s 1.8 percent gain as Asian and European equities dropped before a report on U.S. gross domestic product. Oil has retreated 1.4 percent this week, its largest loss since the five days ended July 2. Prices may decline next week as U.S. inventories rise, according to a Bloomberg survey of analysts.

“The U.S. GDP will be a market mover,” Tobias Merath, head of commodity research at Credit Suisse Group AG, said by phone. “The market is waiting for the next impetus. If you look at supply, demand and inventory levels then you can argue it is well-supplied.”

Crude oil for September delivery fell as much as 79 cents, or 1 percent, to $77.57 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.86 at 12:52 p.m. London time. Brent crude for September settlement dropped as much as 79 cents on the London-based ICE Futures Europe exchange and was at $77.12 a barrel.

Oil’s drop is probably “a combination of weaker equity markets in Europe and Asia together with a stronger U.S. dollar and some economic concerns,” Eugen Weinberg, Frankfurt-based head of commodity research at Commerzbank AG, said today.

The Stoxx Europe 600 Index declined 0.4 percent to 255.17.

U.S. Growth

The U.S. economy probably grew in the second quarter at about the same pace as in the prior three months, economists said before a report today. The 2.6 percent gain in gross domestic product from April through June would follow a 2.7 percent first-quarter increase, according to the median estimate of 81 economists surveyed by Bloomberg News.

The spread between oil futures in New York and London shrunk to the narrowest in two weeks today, making West Africa oil priced off the European benchmark more expensive for U.S. buyers. Rising oil stockpiles in the U.S. may lead to New York crude losing its premium, consultant Petromatrix GmbH said yesterday.

U.S. crude inventories climbed 7.31 million barrels to 360.8 million last week, an Energy Department report showed. Imports increased 12 percent to 11.2 million barrels a day, the highest level since Aug. 25, 2006. Imports in states along the Gulf of Mexico jumped to a record 7.21 million.

Crude oil may fall next week amid increases in U.S. oil supplies and OPEC production, a Bloomberg News survey showed.

Fifteen of 36 analysts, or 42 percent, forecast crude oil will decline through Aug. 6. Twelve respondents, or 33 percent, predicted that futures will rise, and nine, or 25 percent, forecast prices would be little changed.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net;

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