BLBG: Crude Oil Falls a Fifth Day; Poised for Biggest Weekly Decline Since 2008
Oil fell for a fifth day, heading for its biggest weekly decline since December 2008 after reports indicated economic weakness in the U.S. and Europe.
Crude slid more than $5 a barrel in New York to its lowest since Feb. 22 before a Labor Department report that may show the U.S. generated fewer jobs in April than in March. Yesterday jobless benefit applications in the U.S. showed a surprise increase and German factory orders unexpectedly slowed. Goldman Sachs Group Inc. said oil prices may drop further if “economic data releases in coming days continue to disappoint.”
“Demand concerns are finally outweighing recent supply fears,” said Andrey Kryuchenkov, an analyst in London at VTB Capital, a unit of Russia’s second-largest bank. He estimates prices will average about $100 this quarter. “There has been a spike in risk aversion across the board following persistently weak macro numbers. But the market tends to overshoot.”
Crude for June delivery dropped as much as $5.17, or 5.2 percent, to $94.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $97.80 at 12:03 p.m. London time. Oil has plunged 14 percent this week, the largest weekly slump since the period ending Dec. 19, 2008.
Yesterday, futures in New York fell $9.44, or 8.6 percent, to $99.80, the lowest price since March 16 and the biggest percentage drop since April 20, 2009.
Brent crude for June settlement fell as much at $5.65, or 5.1 percent, to $105.15 a barrel on the London-based ICE Futures Europe exchange. Yesterday, it plunged $10.39, or 8.6 percent, to $110.80, the lowest since March 16.
U.S. Labor Market
The London contract has fallen 13 percent this week. That would be íts biggest weekly decline since Dec. 5, 2008. Brent’s premium over the U.S. benchmark, West Texas Intermediate, rose for the second time in a week, to $11.42 a barrel.
Applications for jobless benefits in the U.S. jumped by 43,000 to 474,000 in the week ended April 30, Labor Department figures showed. Economists in a Bloomberg News survey estimated they would fall to 410,000. A report today may show employers in the world’s largest economy hired 185,000 additional workers in April, compared with 216,000 in March.
Oil has gained 10 percent in New York this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Algeria, Bahrain, Iran, Oman, Syria and Yemen.
“Perhaps the world is feeling less tense about the future,” Qatari Oil Minister Mohammed Bin Saleh Al Sada said today in Doha. Supplies of oil are “very healthy,” he said.
Oil may drop further as U.S. supplies remain at a six-month high and as European Central Bank President Jean-Claude Trichet’s indicated the ECB may wait to raise interest rates, a Bloomberg News survey showed.
Fifteen of 30 analysts, or 50 percent, forecast oil will decrease through May 13. Ten respondents, or 33 percent, predicted prices will increase and five projected little change. Last week, 60 percent of respondents said futures would gain.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
