Oil fell for a second day in New York before a meeting of European officials amid speculation the region’s debt crisis and an economic slowdown in Asia will curb fuel demand.
Futures slid as much as 1.3 percent after capping a third weekly decline on Oct. 5, the longest run of losses since June. Finance ministers meet in Luxembourg today to discuss Spain’s overhaul effort and closer banking cooperation. Speculators cut bullish bets on oil in the week ended Oct. 2, a report showed. Economic growth in developing East Asia, including China, will be the slowest since 2001, according to the World Bank.
“The prospects for any really significant increase in demand doesn’t seem to be there,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “There’s plenty of supply. It’s difficult for traders to get too bullish.”
Crude for November delivery dropped as much as $1.17 to $88.71 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.93 at 2:50 p.m. Singapore time. The contract slipped 2 percent to $89.88 on Oct. 5, capping a 2.5 percent loss last week. Prices are down 10 percent this year.
Brent oil for November settlement on the London-based ICE Futures Europe exchange fell as much as $1.16, or 1 percent, to $110.86 a barrel. The European benchmark grade crude was at a $22.27 premium to New York-traded West Texas Intermediate grade. The spread was $22.14 on Oct. 5, the widest since October 2011.
Oil in New York is near long-term technical support at $89.83 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 an intraday record high of $147.27 in July that year. Losses tend to accelerate below chart-support levels.
Prices will decline this week, according to a Bloomberg News survey. Twenty-one of 38 analysts and traders predicted crude will decrease through Oct. 12. Thirteen respondents, or 34 percent, said futures will gain and four said there will be little change in prices.
Hedge-fund managers and other large speculators cut their net-long position in oil futures and options by 11,590 contracts, or 6.52 percent, from a week earlier, according to data from the U.S. Commodity Futures Trading Commission on Oct. 5.
German Chancellor Angela Merkel tomorrow will make her first visit to Greece since the debt crisis began in 2009. Spanish Prime Minister Mariano Rajoy travels for talks with French President Francois Hollande on Oct. 10. Leaders have yet to agree on a plan for rescue conditions and centralized bank supervision, a month after European Central Bank President Mario Draghi unveiled a proposal to buy bonds to alleviate the crisis.
Economic growth in developing East Asia, which excludes Japan and India, will probably ease to 7.2 percent this year, down from 8.3 percent in 2011 and a May forecast of 7.6 percent, the World Bank said. The slowdown in China has been “significant,” the Washington-based lender said.
The U.S. and China are the world’s biggest crude users, accounting for a combined 32 percent of consumption last year, according to BP Plc (BP/)’s Statistical Review of World Energy. The European Union used 16 percent.
“The sentiment about demand may have a negative impact on prices with the global economic slowdown, particularly the concern over Spain and the recent growth revision in China,” Fahad Alturki, a Riyadh-based senior economist at Jadwa Investment Co, said yesterday.
The average price of regular unleaded gasoline reached a record $4.655 a gallon in California yesterday, 22 percent more than the national average of $3.814, said AAA, the largest U.S. motoring organization. Prices have risen and producers including Exxon Mobil Corp. and Valero Energy Corp. (VLO) have rationed deliveries as refinery halts cut into the state’s supplies.
Governor Jerry Brown told state regulators to allow refineries to make an early transition to winter-blend gasoline to help bring pump prices under control, according to a statement yesterday. The grade typically isn’t sold until after Oct. 31 and the end of the smog season because it reduces air quality more than summer gasoline.
To contact the reporter on this story: Ben Sharples in Melbourne at email@example.com
To contact the editor responsible for this story: Alexander Kwiatkowski at firstname.lastname@example.org