BLBG:Oil Falls on Concern Fuel Demand May Slow as Banks Raise Rates
New York, trimming the biggest weekly increase in four, amid speculation fuel demand will falter as Asia’s central banks raise interest rates to curb inflation and the U.S. job market weakens.
Futures slipped as much as 0.4 percent, after earlier climbing 0.2 percent. South Korea’s central bank raised rates for a third time this year and U.S. jobless claims unexpectedly increased. Prices climbed yesterday after the U.S. Commerce Department said the nation’s trade gap shrank 6.7 percent to $43.7 billion, the lowest since December.
“The bulls and bears are firmly entrenched in a tug-of- war,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted crude will average $100 a barrel this year. “The market will be quite happy to take it higher if they see good economic grounds but we don’t have a lot of data to suggest that’s the case.”
Crude for July delivery slid as much as 41 cents to $101.52 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.62 at 4:51 p.m. Sydney time. Prices are up 1.4 percent this week and 35 percent the past year.
Brent crude for July delivery was at $119.80 a barrel, up 23 cents, on the London-based ICE Futures Europe exchange. The contract yesterday increased $1.72, or 1.5 percent, to $119.57. It was the highest settlement since May 4.
The European benchmark contract traded at a premium of $18.14 a barrel to U.S. futures today. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.
Korean Interest Rates
The Bank of Korea raised its benchmark seven-day repurchase rate to 3.25 percent from 3 percent to rein in inflation that has exceeded its target range and curb record household debt. Eight of 17 economists surveyed by Bloomberg News predicted the decision with the rest expecting no change.
U.S. jobless claims climbed by 1,000 to 427,000 last week, Labor Department figures showed yesterday. Economists surveyed by Bloomberg News projected a drop in claims to 419,000, according to the median forecast.
U.S. oil imports declined by $2.42 billion in April, contributing to the narrower trade deficit, the Commerce Department said. The nation imported 8.41 million barrels a day on average, the fewest since October.
--Editors: Paul Gordon, Jane, Ching Shen Lee
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
