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Crude Oil Falls for a Second Day on Speculation U.S. Fuel Demand Will Drop
Oil dropped for a second day in New York on speculation fuel demand will decline as the U.S. summer peak consumption season ends.
Yesterday’s Labor Day holiday marked the end of the peak driving season. Refiners often idle units for maintenance in September and October as gasoline demand drops and before heating-oil use increases. U.S. crude inventories last week rose to the highest level since June, the Energy Department said. Motor fuel supplies are about 10 percent higher than last year.
“The market is reflecting on the fundamentals, the oversupply,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The summer drive time was a complete flop.”
Crude for October delivery fell as much as 93 cents, or 1.3 percent, to $73.67 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $73.76 at 2:30 p.m. Singapore time. Futures are down 7.1 percent so far this year. Yesterday’s transactions will be booked with today’s for settlement purposes as there was no floor trading on Labor Day.
Gasoline demand this summer, measured by the amount of products supplied, averaged 9.36 million barrels a day in the past four weeks through Aug. 27, the Energy Department said Sept. 1. That’s 1.9 percent higher than the same time last year and 0.7 percent less than the corresponding week in 2008.
U.S. motor fuel supplies have reached 225.4 million barrels, the department said last week. That’s the highest level for this time of year for the past five years.
U.S. Stockpiles
Crude also dropped as the dollar gained for a second day against the 16-nation euro, reducing the appeal of commodities as an alternative investment. The greenback was at $1.2798 to the European currency, from $1.2876 yesterday in New York.
“There’s a quiet week in terms of fundamental news, so keep an ear to equities and the dollar,” Stephen Schork, president of energy consultants Schork Group Inc. in Villanova, Pennsylvania, said in a report today.
Weekly inventory data from the Energy Department will be delayed until Sept. 9 because of the Labor Day holiday.
Tropical Storm Hermine, near the western end of the Gulf of Mexico, made landfall about 30 miles south of Brownsville, Texas, the U.S. National Hurricane Center said in a website advisory just before 11 p.m. New York time. The weather system was packing sustained winds of about 60 miles (95 kilometers) per hour and is expected to move into southern Texas.
Brent crude for October settlement on the London-based ICE Futures Europe Exchange dropped as much as 37 cents, or 0.5 percent, to $76.50 a barrel. Yesterday, the contract gained 20 cents, or 0.3 percent, to settle at $76.87.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
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