Oil declined for a second day in New York before reports that may show slowing economic growth in the U.S. and China, curbing fuel demand in the world’s two largest crude consumers. Futures slid as much as 0.6 percent, extending the biggest single-session drop in four weeks on June 10. Sales at U.S. retailers probably fell in May for the first time in 11 months and China’s industrial production slowed, according to economists surveyed by Bloomberg before reports scheduled for tomorrow. Asian stocks extended losses after the longest streak of weekly declines since October 2008. “Weak economic data will subdue the oil market,” said Ken Hasegawa, a commodity derivative sales manager at broker Newedge in Tokyo. “I am concerned if stock markets continue to go down and that depends on the economic reports.” Crude for July delivery fell as much as 59 cents to $98.70 a barrel in electronic trading on the New York Mercantile Exchange and was down 50 cents at $98.79 at 12:51 p.m. Singapore time. The contract on June 10 slid 2.6 percent to $99.29 a barrel, the biggest drop since May 11. Oil is up 32 percent the past year. Brent crude for July settlement was at $118.47 a barrel, down 31 cents, on the London-based ICE Futures Europe exchange. The contract slid 79 cents, or 0.7 percent, to $118.78 on June 10. Equities Slump The Brent contract traded at a record premium of $19.68 a barrel to U.S. futures today. The difference between front-month contracts in London and New York averaged 76 cents last year. Crude slumped on June 10 after reports that Saudi Arabia would increase output and as equity markets dropped. The Dow Jones Industrial Average has declined for six straight weeks, the most since 2002. The MSCI Asia Pacific Index fell as much as 1.1 percent today, extending last week’s 1.4 percent decline. The measure has lost more than 7 percent since this year’s peak on May 2, amid disappointing economic data, capped by a jobs report last week that showed U.S. companies hired fewer workers than estimated. U.S. advance retail sales are set to drop 0.5 percent, following a 0.5 percent gain in April, according to the median forecast of 62 economists surveyed by Bloomberg News ahead of Commerce Department data tomorrow. Chains including Limited Brands Inc. missed analysts’ estimates for May as gasoline prices climbed to the highest level in almost three years and unemployment topped 9 percent. Chinese Production China’s industrial production growth may have slowed to 13.1 percent in May from 13.4 percent in April, according to a separate Bloomberg survey. Consumer price inflation, also scheduled for tomorrow, may have accelerated to 5.5 percent from 5.3 percent. Japan’s machinery orders fell for the first time in four months in April. Factory orders declined 3.3 percent in April from March, when they rose 1 percent, the Cabinet Office said today in Tokyo. Orders, an indicator of capital spending in three to six months, were projected to increase 1.7 percent, according to the median forecast of 30 economists surveyed by Bloomberg News. Saudi Arabia will raise oil production, though it’s too early to say by how much, a Saudi industry official with knowledge of the matter, who declined to be identified, said on June 10. The nation, the world’s largest oil exporter, will increase output to 10 million barrels a day next month, the al- Hayat newspaper reported earlier in the day. OPEC Outlook The 12-member Organization of Petroleum Exporting Countries failed on June 8 to agree on raising quotas in what Saudi Oil Minister Ali al-Naimi said was “one of the worst meetings” ever. Six nations led by Iran opposed a Saudi plan to replace lost output from Libya and aid the U.S. economic recovery, Saudi Oil Minister Ali al-Naimi said. China’s oil processing volume in May rose 4.4 percent from a year earlier to 34.9 million tons, the National Development and Reform Commission said in a statement on its website today. Crude oil output rose 1.1 percent to 17.26 million tons. Oil product output increased 5.2 percent to 21.05 million tons and demand climbed 5.2 percent to 20.19 million tons, the statement said. Hedge Funds Hedge-fund managers and other large speculators decreased their net-long position in crude-oil futures in the week ended June 7, according to Commodity Futures Trading Commission data. Managed money bets that prices will rise, in futures and options combined, outnumbered short positions by 190,974 futures, the Washington-based regulator said in its weekly Commitments of Traders report. Net long positions fell by 33,467 contracts, or 14.91 percent, from a week earlier. Twenty-two of 41 analysts surveyed by Bloomberg, or 54 percent, forecast oil will decline this week. Fourteen respondents, or 34 percent, predicted prices will increase and five estimated little change. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

Source