Oil Caps Year’s Third-Biggest Drop as Banks Cut Growth Outlook

Crude oil capped the third-largest decline of 2011 as commodities fell around the world after Morgan Stanley and Deutsche Bank AG cut their forecasts for global economic expansion.

Futures dropped 5.9 percent and stocks plunged after Morgan Stanley cited an “insufficient” policy response to Europe’s sovereign debt crisis, weakened confidence and the prospect of fiscal tightening. The declines accelerated after U.S. government data showed that jobless claims rose last week.