BGBL: Crude Oil Declines on Signs Slowing U.S. Recovery Will Curtail Fuel Demand
Crude oil slipped on signs that a slowing recovery in the U.S. will curtail fuel consumption in the world’s second-largest energy user.
The industry-funded American Petroleum Institute said yesterday that inventories of crude oil, gasoline and distillate fuels such as diesel grew last week. The Energy Department will issue its report for the same period today. American consumer confidence fell in July, shaken by mounting concern over jobs and wages that threatens to constrain the economic recovery, according to the Conference Board.
“It’s macroeconomic news and fears of a double-dip that will drive sentiment,” said Christophe Barret, an oil analyst with Credit Agricole CIB in London. “The API numbers were not very supportive, with an increase in crude stocks that was not expected and small increases in gasoline and distillates, so now we’re waiting for confirmation from the Energy Department.”
Crude for September delivery was at $77.18 a barrel, down 32 cents, in electronic trading on the New York Mercantile Exchange at 9:20 a.m. London time. The contract dropped as much as 62 cents earlier, or 0.8 percent, to $76.88. Brent crude for September settlement on the London-based ICE Futures Europe fell 27 cents to $75.86.
The U.S. Energy Department report at 10:30 a.m. in Washington may show oil inventories declined to a four-month low, falling 1.73 million barrels from 353.5 million, based on the median estimate from 16 analysts in a Bloomberg News survey.
Gasoline and distillate supplies are expected to have increased, the survey showed.
Crude Stockpiles
U.S. crude inventories rose to 356.3 million barrels in the week ended July 23, the highest in four weeks, according to the American Petroleum Institute report.
Gasoline stockpiles climbed 877,000 barrels to 222.3 million, a four-month high, the API said. Distillate fuel supplies, including heating oil and diesel gained for the ninth time in 10 weeks, adding 407,000 barrels to 162.3 million, the report showed. That’s the highest since the week to Jan. 15.
The Conference Board’s sentiment index fell to 50.4, below the median forecast of economists surveyed by Bloomberg News and the lowest level in five months, figures from the New York-based private research group showed yesterday.
