BLBG: Oil Drops a Third Day as U.S. Consumer Confidence Falls More Than Forecast
Oil fell for a third day, the longest losing streak in six weeks, on concern economic growth in the U.S. and China, the world’s two largest users, will slow.
Oil extended yesterday’s 3 percent decline after the Conference Board said its leading economic index for China rose more slowly in April than previously estimated. The board’s U.S. confidence index in June was lower than all forecasts in a Bloomberg News survey. Asian stocks today dropped the most in more than two weeks.
“Everyone understands now that it will take more time than expected for the economy of America to get better,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge Group in Tokyo. “Oil is in a downtrend after it failed to reach $80.”
Crude for August delivery fell as much as 61 cents, or 0.8 percent, to $75.33 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.71 at 1:52 p.m. Singapore time. Yesterday, the contract declined $2.31 to $75.94, the biggest one-day drop since June 4.
Oil, down 9.6 percent since the end of March, is heading for its first quarterly decline since 2008. Futures have fallen 4.6 percent this year. The market is in the longest decline since a six-day drop through May 18.
Technical Indicators
Crude has declined below technical indicators used by analysts, according to Hasegawa at Newedge. Oil is below the 50- day moving average at $76.30 a barrel, along with the 100-day at $78.67 and 200-day at $77.18.
“This means we may fall further if some bearish news comes into the market,” he said. “It looks weak technically.”
The measure of China’s economy compiled by the New York- based Conference Board rose 0.3 percent in April, less than the 1.7 percent gain it reported June 15. The research group corrected the outlook after a “calculation error” for total floor space on which construction began.
“Crude has been shellacked due to confidence around the world eroding,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “The revision in confidence was a concern.”
The Conference Board reported its U.S. confidence index slumped to 52.9 in June from a revised 62.7 in May, as Americans became pessimistic about the outlook for the labor market and the economy. The median forecast of 71 economists’ estimates in the Bloomberg survey called for a decline to 62.5.
Asian equities fell for a second day, extending a global rout after the Standard & Poor’s 500 Index dropped to its lowest level since October. The MSCI Asia Pacific Index declined 1.4 percent to 112.42 as of 2:08 p.m. in Tokyo.
Hurricane Alex
Oil also dropped on predictions Hurricane Alex, moving west across the southern Gulf of Mexico, will miss production areas. The center of the storm, the earliest Atlantic hurricane since 1995, is forecast to make landfall in northeast Mexico or southern Texas today, according to the U.S. National Hurricane Center in Miami.
The storm has halted about 25 percent of oil production in the Gulf of Mexico and 9 percent of natural-gas output, the U.S. government said yesterday.
U.S. crude inventories declined 3.4 million barrels in the week ended June 25, according to a report yesterday from the industry-funded American Petroleum Institute.
Stockpiles probably dropped 1 million barrels from 365.1 million the prior week, according to the median estimate from 15 analysts surveyed by Bloomberg News before an Energy Department report today. That would be the first decline in three weeks.
Distillate Supplies
Distillate fuel supplies, including diesel and heating oil, rose 4 million barrels to 158.7 million, the API said. That’s the highest since the week to Feb. 19. Gasoline stockpiles fell 908,000 barrels to 220.2 million.
Oil-supply totals from the API and Energy Department moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.
Crude supplies at Cushing, Oklahoma, the delivery point for the New York futures, dropped 1.9 million barrels to 36 million, according to the API data.
Brent crude for August delivery fell as much as 63 cents, or 0.8 percent, to $74.81 a barrel on the London-based ICE Futures Europe exchange. It was at $75.16 at 1:54 p.m. Singapore time. The contract yesterday dropped $2.15, or 2.8 percent, to $75.44, the lowest settlement since June 14.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
