Crude Oil Falls for a Second Day on U.S. Economy, Rising Crude Stockpiles
Oil declined for a second day in New York as investors bet that rising crude supplies and signs of a slowing economy in the U.S. indicate fuel demand may falter in the world’s biggest consumer of the commodity.
Futures slid as much as 0.9 percent today after falling to the lowest in more than a week yesterday. U.S. crude stockpiles climbed 2.3 million barrels to 354 million last week, an Energy Department report showed. A 2 million-barrel drop was forecast in a Bloomberg News survey. Orders for U.S. durable goods unexpectedly slid in June and Tropical Storm Don formed in the waters off Mexico’s Yucatan Peninsula.
“You’ve got continued concerns with demand growth in the U.S.,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts crude in New York will average $98 a barrel in the third quarter. “Overlay that with the stocks report and it weighs on oil.”
Crude for September delivery fell as much as 89 cents to $96.51 a barrel in electronic trading on the New York Mercantile Exchange, and was at $97.19 at 2:43 p.m. Singapore time. The contract yesterday slid $2.19 to $97.40, the lowest close since July 18. Prices are 26 percent higher the past year.
Brent oil for September settlement was at $117.61 a barrel, up 30 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $20.50 a barrel to New York futures, compared with a record close of $22.63 on July 14.
Crude in New York extended losses as prices traded below the 50-day moving average for the first time in more than a week, according to data compiled by Bloomberg. A breach of this, at $97.39 today, typically means prices will continue to fall.
Don, the fourth storm of the Atlantic hurricane season, was 675 miles (1,085 kilometers) east-southeast of Corpus Christi, Texas, heading west-northwest at 12 miles per hour with maximum winds of 40 mph, according to a hurricane center bulletin at 11 p.m. New York time yesterday.
Supplies of crude oil at Cushing, Oklahoma, the delivery point for the New York-traded West Texas Intermediate grade, increased 430,000 barrels to 37.1 million in the week ended July 22, the Energy Department said.
Gasoline inventories rose 1.02 million barrels to 213.5 million. Stockpiles of distillate fuel, a category that includes heating oil and diesel, surged 3.39 million barrels to 151.8 million, the highest since April 1.
The Energy Department will deliver 30.64 million barrels of crude oil from the U.S. Strategic Petroleum Reserve in July and August, according to its website. The department will deliver about 8.7 million barrels this month. The International Energy Agency announced June 23 its members were offering 60 million barrels of oil from emergency stockpiles to damp prices.
Bookings for goods meant to last at least three years fell 2.1 percent after a 1.9 percent gain the prior month that was smaller than last reported, the Commerce Department said yesterday in Washington. Demand for business equipment, including machinery and computers, also dropped.
The economy grew at a slower pace in more parts of the U.S. since the beginning of June as shoppers restrained spending and factory production eased, the Federal Reserve said in its Beige Book survey released yesterday in Washington.
Oil in New York also declined as a stalemate over the U.S. debt ceiling pushed the government closer to default. BlackRock Inc., Loomis Sayles & Co. and Franklin Templeton Investments said the country faces losing its top-level debt rating as officials struggle to raise the $14.3 trillion borrowing limit.
House Speaker John Boehner revised his plan to raise the debt ceiling as he gained support among fellow Republicans for a proposal which all 51 Senate Democrats and two independents pledged to oppose.
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