Crude Oil Trades Below $74 Amid Fears of Double-Dip Recession in the U.S.
Oil declined as equity indexes slipped and traders waited for signs whether the European Central Bank will extend emergency lending.
ECB President Jean-Claude Trichet may signal at a rate meeting today that policy makers will keep offering unlimited cash to financial institutions through the end of the year. A U.S. government report yesterday showed crude stockpiles increased almost three times more than analysts forecast.
“There are still fears about a double-dip recession in the U.S,” said Roland Stenzel, a crude and carbon trader at E&T Energie Handelsgesellschaft mbH, said from Vienna.
The October contract on the New York Mercantile Exchange fell as much as 46 cents, or 0.6 percent, to $73.45 a barrel, and traded at $73.58 a barrel as of 12:19 p.m. London time. Brent crude for October settlement was down 57 cents, or 0.8 percent, at $75.78 a barrel on the London-based ICE Futures Europe Exchange, after rising 2.3 percent yesterday.
U.S. crude oil stockpiles jumped by 3.43 million barrels to 361.7 million last week, data from the Energy Department showed. Supplies were projected to climb 1.2 million barrels, according to a Bloomberg News survey.
“U.S. inventories are pretty enormous,” said Alexander Ridgers, head of commodities at London-based CMC Markets, which handles more than $150 million a day in U.S. crude contracts.
Oil advanced 2.8 percent yesterday after the Tempe, Arizona-based Institute for Supply Management reported an increase in its August factory index. Economists forecast the indicator would decline, according to a Bloomberg News survey.
The ISM factory index rose to 56.3, from 55.5 in July. Economists forecast the index would fall to 52.8, based on the median of 78 projections in a Bloomberg News survey.
The Stoxx Europe 600 Index and Standard & Poor’s 500 Index futures fell as much as 0.4 percent.