Oil Declines a Third Day on Global Economic Slowdown, Rising Crude Supply
Oil dropped for a third day in New York as investors speculated that fuel demand will falter amid slowing global growth and rising supplies. Goldman Sachs Group Inc. lowered its 2012 forecast for Brent crude.
Futures slid as much as 2.2 percent after falling yesterday to the lowest settlement in more than a year. European leaders indicated that investors may have to take bigger losses than previously assumed on Greek debt, while Goldman Sachs cut its 2012 Brent forecast to $120 a barrel from $130. U.S. crude inventories climbed for a second week, an Energy Department report tomorrow may show. Libya aims to raise production to more than 500,000 barrels a day by the end of this month, according to the chairman of state-run National Oil Corp.
“We are seeing continuing pressure across the commodities complex from these concerns about the global growth prospect,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty Ltd. in Sydney. “The markets are universally bearish, and we’re looking for reasons to sell. The oil markets are being affected by that.”
Crude for November delivery declined as much as $1.69 to $75.92 a barrel in electronic trading on the New York Mercantile Exchange and was at $77.16 at 5:10 p.m. Sydney time. The contract yesterday fell 2 percent to $77.61, the lowest close since Sept. 28, 2010. Prices are down 16 percent this year.
Brent oil for November settlement slipped 0.3 percent to $101.40 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $24.16 to New York crude, compared with a record of $26.87 on Sept. 6.
Jeffrey Currie, an oil analyst at Goldman Sachs, cited a “flatter upward trajectory” as he cut his Brent crude forecast. In a separate report, Goldman Sachs cut its global economic growth forecast for this year and next, predicting recessions in Germany and France as Europe stalls and the risk of a contraction in the U.S. grows.
European finance ministers met in Luxembourg yesterday to discuss the debt crisis. They considered “technical revisions” to a July deal that foresaw investors contributing 50 billion euros ($66 billion) to a 159 billion-euro rescue for Greece.
Hedge funds and other money managers cut bullish bets on Brent by 36 percent in the week ended Sept. 27, according to data from ICE Futures Europe. Speculative bets that prices will rise in futures and options combined outnumbered short positions by 47,027 contracts, the London-based exchange said yesterday in its weekly Commitment of Traders report.
The European benchmark future may fall to $84 a barrel after its 50-day moving average fell below the 200-day average last week in a formation known as the “death cross,” according to technical analysis by hedge fund Again Capital LLC.
Libya aims to raise oil output after the North African nation restarted the Zawiya refinery, its second largest, according to Nuri Berruien, the chairman of National Oil Corp. The country’s goal of restoring crude production to 1.7 million barrels a day within 15 months is a “conservative figure,” he said yesterday in Tripoli.
Fighting in Libya reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell to 45,000 barrels a day in August, according to Bloomberg estimates. The North African nation pumped 100,000 barrels a day last month.
U.S. crude inventories rose 1.9 million barrels last week, according to the median of 10 analyst estimates in a Bloomberg News survey before the Energy Department report. Gasoline supplies climbed 1.23 million barrels, the survey shows.
New York crude may test technical support at around $74 a barrel and $64 a barrel, levels that correspond with the 50 and 62 percent retracement levels on a Fibonacci study from lows in January 2009, said Stephen Schork, president of Schork Group Inc., an energy advisory company in Villanova, Pennsylvania.
To contact the reporter on this story: Ben Sharples in Melbourne at email@example.com
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