Aug. 16 (Bloomberg) -- Oil dropped from the highest in almost two weeks in New York after Germany’s economy all but stagnated in the second quarter, heightening concern that fuel consumption will diminish.
Futures slid as much as 1.8 percent today after Germany’s Federal Statistics Office said gross domestic product, adjusted for seasonal effects, rose 0.1 percent from the first quarter. Growth across Europe slowed more than economists forecast. U.S. builders began work on fewer homes in July, indicating residential real estate is failing to contribute to growth. The Energy Department may say tomorrow U.S. crude oil stockpiles declined to a five-month low.
“The overall picture is that worldwide economic activity is slowing down a bit, and of course that’s bearish for oil,” said Sintje Diek, an analyst at HSH Nordbank in Hamburg who correctly predicted that Brent prices would fall to $100 this summer. “There are fears the recovery in the euro zone will be very sluggish because of the debt crisis. Maybe we’ll see lower prices than $100.”
Crude for September delivery declined as much as $1.62 to $86.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.29 at 1:33 p.m. London time. The contract yesterday gained 2.9 percent to $87.88, the highest settlement since Aug. 3. Prices have risen 15 percent in the past year.
Brent oil for September settlement fell $1.24, or 1.1 percent, to $108.67 a barrel on the ICE Futures Europe in London. The European benchmark was at a premium of $22.32 to U.S. futures, compared with a record close of $23.79 on Aug. 10.
Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, when it increased 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement today. That’s the worst performance since the euro region emerged from a recession in late 2009.
“A lot of the indicators out of Europe have been weak,” 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.”
Growth in China, the world’s second-biggest oil consumer, is “significantly moderating,” the Conference Board, a New York-based research organization, said today. 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.
Building Permits Slump
Housing starts fell 1.5 percent to a 604,000 annual rate, in line with the median forecast of economists surveyed by Bloomberg News, from June’s 613,000 pace, Commerce Department figures showed today in Washington.
An Energy Department report tomorrow may show U.S. crude stockpiles declined as imports fell and refineries ran near the highest rates of the year, according to a Bloomberg News survey.
Inventories dropped 750,000 barrels from 349.8 million in the seven days ended Aug. 12, according to the median of 10 analyst estimates in the survey. The fall would leave stockpiles at the lowest since the week ended March 4.
Tropical Storm Gert weakened after passing Bermuda yesterday and heading northeast into the Atlantic, the U.S. National Hurricane Center said.
Gert, 410 miles (660 kilometers) northwest of Bermuda, moved at a faster pace of 22 miles per hour and lower intensity, with maximum sustained winds of 45 mph, the center said in a statement released at 4:35 a.m. Atlantic Standard Time. Storm force winds extended 70 miles from the core, it said.
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