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Crude Oil Heads for Weekly Decline on Forecast for U.S. Jobless Increase

Oil declined, headed for a weekly drop, amid forecasts that a U.S. government report will probably show the jobless rate rose in August for the first time in four months, signaling a recovery in fuel demand may falter.

Futures gave up some of yesterday’s 1.5 percent gain as analysts estimated the August payrolls report from the Labor Department may show the U.S. economy lost 105,000 jobs, according to a Bloomberg survey. Crude gained yesterday after an explosion on a Gulf of Mexico oil and gas platform prompted speculation that tighter regulations will cut production.

“Trading is volatile,” said Peter McGuire, managing director at CWA Global Markets Pty in Sydney. “People are still sitting on the sidelines waiting for the unemployment numbers.”

The October contract fell as much as 48 cents, or 0.6 percent, to $74.54 a barrel in electronic trading on the New York Mercantile Exchange, and was at $74.69 at 2:53 p.m. Singapore time. Yesterday, it gained $1.11 to $75.02. Futures are 0.6 percent lower this week and down 5.9 percent this year.

“The market will turn to payroll numbers tonight with expectations of a headline fall of 105,000 and a rise in the unemployment rate to 9.6 percent,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in an e-mailed note today.

Hurricane Earl

Hurricane Earl weakened to a Category 2 storm as it passed the eastern seaboard of the U.S., the National Hurricane Center said in an advisory at 8 p.m. Miami time. Earl’s winds decreased to 110 miles (165 kilometers) per hour from 115 mph earlier, the center said.

U.S. crude oil stockpiles climbed 3.43 million barrels to 361.7 million last week, an Energy Department report showed Sept. 1. Supplies were projected to increase 1.2 million barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.

Refineries operated at 87 percent of capacity, down 0.7 percentage point from the prior week, the department said. It was the lowest level since April. Refiners often idle units for maintenance in September and October as gasoline demand falls and before heating-oil use increases.

A fire on a Mariner Energy Inc. platform about 90 miles off the Louisiana coast soil and natural gas platform was put out at approximately 3:30 p.m. local time yesterday, and all 13 workers rescued without injury, Coast Guard Captain Peter Troedsson said at a press conference in New Orleans.

Home Sales

Asian stocks rose, following U.S. equities and extending the benchmark index’s biggest weekly gain in a month, as a surprisingly positive increase in pending U.S. home sales lifted confidence in the world’s largest economy. The MSCI Asia Pacific Index climbed 0.4 percent to 119.78 as of 3:10 p.m. in Tokyo.

The National Association of Realtors said that the number of contracts to purchase previously owned houses in the U.S. rose 5.2 percent in July. The Standard & Poor’s 500 Index went up 0.9 percent in New York, and the Dow Jones Industrial Average increased 0.5 percent.

“From a historical data point, September is the worst month for U.S. equities and that’s probably going to put a little bit of choppiness into the whole market,” said CWA’s McGuire.

Initial jobless claims fell by 6,000 to 472,000 in the week ended Aug. 28, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed. Applications exceeded the 463,000 average so far this year.

Crude oil may fall next week as U.S. refineries perform seasonal maintenance, reducing demand, a Bloomberg News survey showed. Fourteen of 34 analysts, or 41 percent, forecast crude oil will decline through Sept. 10. Ten respondents, or 29 percent, predicted that futures will rise, and 10 projected prices will be little changed. Last week, 41 percent of analysts forecast an increase.

Brent crude for October settlement declined as much as 57 cents, or 0.7 percent, to $76.36 on the London-based ICE Futures Europe exchange. Yesterday, it rose 58 cents, or 0.8 percent, to end the session at $76.93.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

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