BS: Oil Falls, Trades Near Six-Week Low on Signs Recovery Slowing
Aug. 20 (Bloomberg) -- Crude oil declined to trade near a six-week low as rising U.S. jobless claims and a contraction in manufacturing added to concern growth in the world’s biggest oil-consuming nation is slowing.
Oil, down 1.8 percent this week, fell yesterday after the Labor Department said weekly claims for unemployment benefits climbed to the highest level since November. The Federal Reserve Bank of Philadelphia’s general economic index dropped to the lowest reading since July 2009. Total U.S. inventories of crude and oil products reached the highest in at least 20 years, Energy Department data showed earlier this week.
“You certainly see an overhang developing in oil product stocks in the U.S.,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “Gasoline demand has witnessed a difficult recovery from its recession induced-lows, and one of the main stumbling blocks for this has been high U.S. unemployment.”
Crude for September delivery fell as much as 40 cents, or 0.5 percent, to $74.03 a barrel in electronic trading on the New York Mercantile Exchange and traded at $74.06 at 10:35 a.m. London time. Brent crude for October was down 13 cents at $75.17 a barrel on the ICE Futures Europe Exchange in London.
The September Nymex contract expires today. Yesterday it fell 1.3 percent to $74.43, the lowest settlement since July 7. The more actively traded October contract fell 36 cents to $74.41 a barrel. Futures are set for a second weekly drop.
Jobless Claims Rise
“Sentiment and the fundamental news at the moment is still quite bearish, and I think that will weigh on the market and probably see prices lower,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “I think $70 to $68 is on the cards.”
U.S. total petroleum stockpiles climbed 5.3 million barrels to 1.13 billion in the week ended Aug. 13, the highest level since at least 1990, an Aug. 18 Energy Department report showed.
--Editors: John Buckley, Raj Rajendran
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
