By Grant Smith April 16 (Bloomberg) -- Oil declined for a second day on speculation that economic recovery may be stalling in the U.S., the world’s largest energy consumer. Oil slipped below $85 a barrel in New York as the U.S. currency strengthened against the euro amid speculation Greece will struggle to curb its budget deficit. U.S. weekly jobless claims unexpectedly climbed to a two-month high and industrial output in March rose 0.1 percent, less than analysts forecast. Crude oil for May delivery fell as much as $1.03, or 1.2 percent, to $84.48 a barrel in electronic trading on the New York Mercantile Exchange. It was at $84.56 at 12:04 p.m. London time. Brent crude oil for June settlement was down 74 cents at $86.85 on the London-based ICE Futures Europe exchange. “Developments around Greece will likely push the euro and other currencies lower against the dollar as risk appetite declines, which is negative for oil,” said Harry Tchilinguirian, head of commodity derivatives research at BNP Paribas SA in London. “More caution will develop on the pace of economic recovery in the west, as U.S. labor markets remain disconnected from improvements in manufacturing.” Futures are little changed this week after gaining in the previous two weeks. Oil fell yesterday for the sixth time in seven days after the Labor Department said initial unemployment claims rose 24,000 to 484,000 in the week ended April 10. The increase had more to do with administrative factors reflecting volatility around the Easter holiday than economic reasons, according to a government spokesman. Unemployment ‘Negativity’ “There was a bit of negativity that came into the market from the unemployment numbers,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. The dollar strengthened for a second day against the 16- nation euro before a meeting of European Union finance ministers in Madrid to discuss swelling budget deficits. The greenback was at $1.3535 against the euro at 12:04 p.m. in London, compared with $1.3573 yesterday in New York. “We’re likely to find some support in the near term around the mid-$80s, although the fundamentals still don’t really support these prices,” said Victor Shum, a senior principal at U.S. energy consultants Purvin & Gertz Inc. in Singapore. “The move today has been a reaction to the strengthening U.S. dollar versus the euro. The issue with Greece adds to the volatility.” U.S. crude oil inventories, which fell last week for the first time in 11 weeks, were still 5.1 percent above the five- year average. Commercially held stockpiles reached 354 million barrels in the week to April 9, the Energy Department said on April 14. Gasoline stockpiles were 4.7 percent above the average and distillate supplies were 23 percent higher. Oil may rise next week, a Bloomberg News survey showed. Sixteen of 36 analysts and traders, or 44 percent, forecast prices will climb through April 23. Fifteen respondents, or 42 percent, predicted futures will drop and five said oil will be little changed. Last week, 50 percent of respondents said the market will pull back. To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

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