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Oil Drops on Demand Concern Amid Signs Economy Slowing‏

12 Jul

Oil fell in New York on signs from Asia and the U.S. that the global recovery is faltering and eroding demand for fuels.

Futures slid as much as 1.2 percent after South Koreaunexpectedly cut interest rates, Australia’s jobless rate rose, and the International Energy Agency trimmed its oil demand outlook for this year and predicted “muted” growth in 2013. U.S. gasoline inventories rose almost six times as much as forecast and fuel use declined, a report from the Energy Department showed yesterday.
The euro slumped to a two-year low, and European stocks declined after minutes released by theFederal Reserve disappointed investors.

“The supply side has been tightening, but the demand side of the equation is still very poor,” said Guy Wolf, a strategist at Marex Spectron Group Ltd., a London-based commodities broker.

“The European liquidity drain is starting to impact heavily on their domestic economy. That is occurring as China slows aggressively and the U.S. recovery has stalled.”

Crude for August delivery declined as much as $1.35 to $84.46 a barrel in electronic trading on the New York Mercantile Exchange.
It was at $84.56 at 12:50 p.m. London time. The contract yesterday climbed $1.90 to $85.81, the highest close since July 9. Prices have decreased 14 percent this year.
Brent oil for August settlement on the London-based ICE Futures Europe exchange slid as much as $1.72, or 1.7 percent, to $98.51 a barrel.

The European benchmark contract was at a premium of $14.38 to New York-traded West Texas Intermediate. The spread was $14.42 yesterday, the widest in four weeks.

The Stoxx Europe 600 Index fell 0.9 percent. The euro dropped 0.5 percent to $1.2181 and reached $1.2173, the lowest since June 30, 2010.

Officials debated the need for further stimulus measures at the Federal Open Market Committee’s June 19-20 meeting, minutes released yesterday in Washington showed.

Two participants supported additional bond purchases, while two others said only a further deterioration in the economy would warrant the step.

The IEA forecasts faster growth in world oil demand next year as the global economy recovers, in contrast to the slower expansion that OPEC projected in a report yesterday.

Oil consumption will increase by a “relatively muted” 1 million barrels a day, or 1.1 percent, to an average of 90.9 million a day in 2013, the Paris-based adviser said today in its first outlook for the coming year.

That’s a higher growth rate for next year than the 800,000 barrels a day that the Organization of Petroleum Exporting Countries estimated yesterday. Demand in emerging economies will surpass that of developed nations for the first time in 2013, the IEA forecasts.

Global oil consumption will increase by 800,000 barrels a day, or 0.9 percent, to average 89.89 million barrels a day this year, or 15,000 a day less than the agency predicted last month.

Oil in New York has technical support along the middle Bollinger Band on the daily chart, around $83.38 a barrel today, according to data compiled by Bloomberg. Futures have halted declines near that indicator every day since July 6. Buy orders tend to be clustered close to chart-support levels.

Prices surged 2.3 percent in New York yesterday after an Energy Department report showed a bigger-than-expected drop in U.S. crude stockpiles.

Australian employers unexpectedly cut payrolls in June, and the jobless rate rose for a second month, to 5.2 percent from 5.1 percent, data from the statistics bureau in Sydney showed.

South Korea reduced its benchmark seven-day repurchase rate by a quarter of a percentage point, highlighting concern that exports are threatened by Europe’s failure to resolve its debt crisis.

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Posted by on July 12, 2012 in Business News, International News

 

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One response to “Oil Drops on Demand Concern Amid Signs Economy Slowing‏

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