Aug. 16 (Bloomberg) -- Oil dropped from the highest in almost two weeks in New York as investors bet that signs of a slowing global economy indicate fuel demand will falter.
Futures slid as much as 0.8 percent today before reports that may show U.S. housing starts and building permits fell in July and European growth eased last quarter. Manufacturing in the New York region unexpectedly contracted in August for a third month, a report yesterday showed.
“The U.S. economy is a little bit weaker than any of us were expecting at this time of the year and a lot of the indicators out of Europe have been weak as well,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $93 a barrel in the third quarter. “We all knew that it was going to take a long time for these areas to get back on their feet and there would be this lull in activity after all the stimulus had washed out.”
Crude for September delivery fell as much as 71 cents to $87.17 a barrel in electronic trading on the New York Mercantile Exchange. It was at $87.26 at 1:48 p.m. Singapore time. Yesterday, the contract gained 2.9 percent to $87.88, the highest settlement since Aug. 3. Prices are down 4.5 percent this year.
Brent oil for September settlement on the London-based ICE Futures Europe exchange dropped as much as 68 cents, or 0.6 percent, to $109.23 a barrel. The European benchmark grade was at a premium of $22 to U.S. futures, down from a record close of $23.79 on Aug. 10. The more actively traded October contract fell 67 cents to $109.17.
Growth in China, the world’s second-largest oil consumer, is slowing “significantly,” according to The Conference Board, a New York-based research organization. The nation’s expansion may cool to 9.2 percent in the third quarter from 9.5 percent in the previous three months, the China Securities Journal reported today, citing the State Information Center.
Builders in the U.S., the world’s biggest crude consumer, broke ground on 600,000 homes at an annual rate in July, a 4.6 percent drop from June, according to the median estimate of 77 economists surveyed by Bloomberg News before today’s report. Building permits, a sign of future construction, probably fell 1.9 percent. Economic growth in the eurozone dropped to 1.8 percent in the second quarter from a year ago, the lowest expansion in more than a year, another survey showed.
The Federal Reserve Bank of New York’s so-called Empire State Index fell to minus 7.7 from minus 3.8 in July, a report showed yesterday. The median forecast in a Bloomberg News poll called for an index of zero, the dividing line between expansion and contraction. The bank’s six-month outlook gauge dropped to the third-weakest level on record.
An Energy Department report tomorrow may show U.S. crude inventories declined to a five-month low as imports fell and refineries operated near the highest rates of the year, based on a Bloomberg News survey.
Oil stockpiles dropped 750,000 barrels from 349.8 million in the seven days ended Aug. 12, according to the median of 10 analyst estimates. The fall would leave stockpiles at the lowest since the week ended March 4.
Tropical Storm Gert turned north-northeast on a track away from Bermuda and the North American coast, according to the U.S. National Hurricane Center. Gert, packing maximum sustained winds of 60 miles (97 kilometers) per hour, was 135 miles east-southeast of Bermuda and moving north-northeast at 14 mph, the Miami-based center said in an advisory.
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