By Yee Kai Pin and Ben Sharples May 14 (Bloomberg) -- Crude oil is poised for a second weekly decline amid speculation Europe’s sovereign-debt crisis and rising supplies in the U.S., the world’s biggest energy consumer, signaled global fuel demand will be slow to recover. Oil dropped for a fourth day after the euro traded near a 14-month low against the dollar, damping the investment appeal of commodities. Crude inventories at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is delivered, rose to a record high last week, the Energy Department said May 12. “What has been really driving the turmoil really is the uncertainty regarding the euro-zone sovereign-debt crisis,” said Victor Shum, a senior principal at U.S. energy consultants Purvin & Gertz Inc. in Singapore. “Investors are trying to make sense whether the bailout package that was announced at the beginning of the week really would have any substantive bite. Lately a lot of doubt has been raised.” Crude oil for June delivery fell as much as 78 cents, or 1.1 percent, to $73.62 a barrel, in electronic trading on the New York Mercantile Exchange. It was at $73.93 at 2:48 p.m. Singapore time. Yesterday, the contract lost 1.7 percent to $74.40, the lowest settlement since Feb. 12. Futures are set for a 2 percent drop this week. Oil has pulled back more than 15 percent since reaching $87.15 a barrel on May 3, a 19-month high, as the euro weakened against the dollar. The market retraced some losses today after the U.S. currency slipped to $1.2565 per euro at 2:48 p.m. in Singapore, from $1.2535 in New York. Portugal announced yesterday austerity measures, a day after Spain proposed to reduce its deficit, spurring concern that fiscal tightening in the region will undermine economic growth and derail the global recovery. Oil Supplies Crude stockpiles at Cushing increased 784,000 barrels last week to 37 million, the highest since the Energy Department started keeping records at the storage hub in April 2004. Total crude oil inventories in the U.S. gained 1.95 million barrels to 362.5 million, the 14th stock build in 15 weeks, as refiners cut processing rates, the department’s report showed. Supplies were 6.1 percent above the five-year average for that period, compared with 5.4 percent the previous week. “Builds will continue,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “This is normal as we head into summer drive time. Expect demand to pick up soon.” New York oil for June delivery traded at $4.66 a barrel below the July contract, the biggest divergence between front- month futures since Feb. 12, 2009. The spread between June and December climbed to $10.53. A widening discount, or contango, favors the storing of supplies. Price Survey Oil may rise next week on speculation the dollar will drop against the euro as the European Union’s bailout of almost $1 trillion comes into effect, a Bloomberg News survey showed. Twenty-four of 46 analysts and traders, or 52 percent of them, forecast futures will increase through May 21. Fourteen respondents, or 30 percent, predicted prices will be little changed and eight said the market will decline. Last week, 50 percent of survey respondents said oil would rise. “The U.S. economy has been showing increasing signs of a recovery,” said Shum at Purvin & Gertz. “If the European crisis spreads, it would drag down the U.S. That’s why it’s in everybody’s interest to stop any fears of contagion.” Brent crude oil for June settlement, which expires today, fell as much as 47 cents, or 0.6 percent, to $79.64 a barrel on the London-based ICE Futures Europe exchange. It was at $79.84 at 2:46 p.m. Singapore time. The more actively traded July future was down 21 cents at $81.22. To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

Source