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Oil Drops a Fourth Day Amid Concern Greek Referendum Raises Default Risk

Oil fell in New York for a fourth day, the longest losing streak in three months, on concern a Greek referendum on Europe’s rescue plan will worsen the region’s debt crisis and curb economic growth.

Futures dropped as much as 1.3 percent after Greek Prime Minister George Papandreou pledged to put Europe’s financing package to a vote. U.S. manufacturing was close to stagnating last month, a report showed yesterday. The Energy Department may today say U.S. crude stockpiles rose last week, according to the median estimate in Bloomberg News survey.

“The euro-zone issue remains a key factor driving both financial markets and oil markets,” said Victor Shum, a senior principal at Purvin & Gertz Inc., a consultant in Singapore. “Economic uncertainties are going to put pressure on oil.”

Oil for December delivery fell as much as $1.22 to $90.97 a barrel in electronic trading on the New York Mercantile Exchange. It was at $91.73 at 9:44 a.m. Singapore time. Yesterday, the contract slid $1 to settle at $92.19. Prices are up 0.4 percent this year.

Brent oil for December settlement on the London-based ICE Futures Europe exchange decreased as much as 94 cents, or 0.9 percent, to $108.60 a barrel. The European benchmark contract traded at $17.49 over New York futures, up from $16.37 on Oct. 31, the smallest premium since June 28.

Oil has erased this year’s gains on speculation global economic growth will falter and curb fuel consumption. Futures in New York climbed 15 percent last year and 78 percent in 2009.

Greece, U.S.

Papandreou told his ministers in Athens a referendum would confirm Greece as a member of the European Union and the euro area. The poll will hinder the next installment of aid funds, Dutch Finance Minister Jan Kees de Jager said. A rejection of the aid plan “would increase the risk of a forced and disorderly sovereign default” and raises the chance of Greece leaving the euro, according to Fitch Ratings.

The U.S. Institute for Supply Management’s factory index slid to 50.8 from 51.6 in September, the Tempe, Arizona-based group said. A reading of 52 was the median forecast in a Bloomberg News survey of economists. Fifty is the dividing line between growth and contraction.

Crude stockpiles in the U.S., the world’s largest oil consumer, probably increased 1 million barrels in the week ended Oct. 28, according to the median estimate in the Bloomberg survey. Inventories fell 156,000 barrels, the American Petroleum Institute said yesterday. The industry group also reported a 1.1 million-barrel drop in gasoline inventories and a decline of 3.4 million in distillate supplies.

Technical Support

Oil in New York has technical support at $89.84 a barrel, according to data compiled by Bloomberg. On the weekly chart, that’s the 50 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July that year. Buy orders tend to be clustered near chart-support levels.

A surplus of the largest crude-oil carriers at Persian Gulf ports expanded as available ships overwhelmed demand, a Bloomberg News survey showed.

There are 15 percent more very large crude carriers, or VLCCs, available for hire in the Persian Gulf than there are likely cargoes, according to the median estimate in a survey of four shipbrokers and two owners yesterday. That’s up 5 percentage points from last week, when the excess was the smallest since June 21.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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