BLBG: Oil Falls on Skepticism U.S. Plan Will Bolster Economy, Demand
By Mark Shenk
Oct. 14 (Bloomberg) -- Crude oil fell on skepticism that a U.S. government plan to invest $250 billion in banks will be enough to bolster economic growth and fuel use.
Oil has followed the stock market this month as the credit crisis deepened. A government report on Oct. 16 may show that U.S. crude-oil and gasoline supplies rose for a third week. The International Energy Agency and U.S. Energy Department cut their forecasts of global oil demand next year.
``The oil market is getting its cue from the stock market right now,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``There are signs that we might be getting our market back and begin trading on supply and demand again before long.''
Crude oil for November delivery fell $1.08, or 1.3 percent, to $80.11 a barrel at 11:22 a.m. on the New York Mercantile Exchange. Prices, which are down 4.2 percent from a year ago, have dropped 46 percent from the record $147.27 a barrel reached on July 11.
Oil in New York climbed more than $3 a barrel yesterday when the Standard & Poor's 500 Index had its biggest one-day gain since 1939 and the Dow Jones Industrial Average posted its best rally since 1933.
``It's clear that the economy will be lurching around for a while, which raises concerns about energy demand,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut.
U.S. fuel demand averaged about 18.7 million barrels a day during the four weeks ended Oct. 3, the lowest since June 1999, according to an Energy Department report on Oct. 8. The U.S. consumes 24 percent of the world's oil.
The department's report tomorrow is forecast to show that U.S. crude oil and gasoline inventories rose last week, according to the median of responses by analysts in a Bloomberg News survey.
Brent crude oil for November settlement declined 85 cents, or 1.1 percent, to $76.61 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
