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Oil Declines as U.S. Jobless Claims, Home Sales Miss Esti

Oil declined in New York as more Americans than forecast filed applications for unemployment benefits and sales of previously owned homes fell, adding to concern that the U.S. recovery is stalling.

Futures dropped 0.4 percent after the Labor Department said jobless claims decreased by 2,000 to 386,000 last week. The median forecast of 47 economists surveyed by Bloomberg called for 370,000. Purchases fell 2.6 percent to a 4.48 million annual rate from 4.6 million in February, the National Association of Realtors reported in Washington.

“The jobless claims combined with the housing numbers are evidence that the economy is still struggling a bit,” said Phil Flynn, vice president of research at futures brokerage PFGBest in Chicago. “The economy is growing but it’s very uneven.”

Crude oil for May delivery declined 40 cents to $102.27 a barrel on the New York Mercantile Exchange, the lowest settlement since April 10. Prices are down 5.4 percent from a year ago.

Brent oil for June settlement increased 3 cents to end the session at $118 a barrel on the London-based ICE Futures Europe exchange.

The European benchmark contract’s front-month premium to New York-traded West Texas Intermediate for June delivery widened for a second day, reaching $15.28. The spread narrowed to $14.14 on April 17 based on settlement prices, the lowest level since Feb. 1.

Jobless Claims

The Labor Department revised the previous week’s jobless claims figure to 388,000 from 380,000. Employers added 120,000 jobs in March, half as many as in February and the fewest in five months, according to payrolls figures released on April 6. The jobless rate fell to 8.2 percent, a three-year low.

The Standard & Poor’s 500 Index and the Dow Jones Industrial Average were both down 0.6 percent at 3:51 p.m. in New York.

“The crude oil market tends to interpret economic data through the lens of the S&P,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “If the S&P is down, chances are crude will be as well.”

Brent oil climbed earlier as Spain and France met their maximum targets by selling 13.05 billion euros ($17 billion) in debt, and a projection of German economic growth increased.

“You are seeing greater strength in Brent than WTI because of the Spanish debt auction,” said Chris Dillman, an analyst and broker at Tradition Energy in Stamford, Connecticut.

European Crisis

Oil prices have moved for more than two years on the latest developments in the euro region’s debt crisis and its projected impact on the continent’s energy demand. The crisis that began in Greece has spread to Ireland, Portugal, Italy and Spain.

The U.S. was responsible for 21 percent of global oil demand in 2010, according to BP Plc’s Statistical Review of World Energy released in June. The 17 countries using the euro accounted for about 12 percent of world use.

Oil in New York reached $110.55 on March 1, the highest intraday level since May 4, amid speculation that Western sanctions aimed at halting Iran’s nuclear program will disrupt Middle East shipments. Prices have dropped 7.5 percent since that peak as tensions have eased.

The first international talks in 15 months on Iran’s nuclear program, held April 14 in Istanbul, were called “constructive” by both Catherine Ashton, the European Union’s foreign policy chief, and Iran’s lead negotiator, Saeed Jalili. The United Nations’ five permanent Security Council members plus Germany will are scheduled to meet Iranian delegates on May 23.

“The oil market is in a bearish trend,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “Prices surged above $110 not long ago on fears about a conflict with Iran. We’re now seeing the Iran premium slowly bleed away.”

Gasoline Market

Gasoline dropped to a seven-week low today on speculation that a slowing economy will reduce motor-fuel demand. The drop helped pull crude oil lower. An Energy Department report yesterday showed that consumption of the fuel last week was down 3.2 percent from a year earlier.

“All the action is in gasoline today,” Evans said. “There are concerns that demand won’t pick up.”

Gasoline for May delivery decreased 4.86 cents, or 1.5 percent, to $3.1541 a gallon in New York, the lowest settlement since Feb. 29. Futures climbed to $3.4166 on March 26, the highest level since April 29, 2011.

Electronic trading volume of crude oil on the Nymex was 456,804 contracts as of 3:51 p.m. in New York. Volume totaled 632,816 contracts yesterday, 1.1 percent below the three-month average. Open interest was 1.56 million.

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