Oil traded at about $99 a barrel 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 fuel consumers. Futures dropped as much as 0.7 percent, after 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. Saudi Arabia last week signaled its readiness to keep markets adequately supplied after the collapse of OPEC talks. “The rate of growth in global demand remains an important unknown,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Sentiment now is that demand may grow faster than OPEC’s appetite to increase output. I think the reality will be that Saudi production continues to creep up.” Crude for July delivery fell as much as 66 cents to $98.63 a barrel in electronic trading on the New York Mercantile Exchange and was down 27 cents at $99.02 at 9:16 a.m. London 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 in the past year. Brent crude for July settlement was at $118.86 a barrel, up 8 cents, on the London-based ICE Futures Europe exchange. The contract slid 79 cents, or 0.7 percent, to $118.78 on June 10. North Sea Brent traded at a record premium of $20 a barrel to U.S. futures today. Economic Reports Saudi Arabia will increase production, though it’s too early to say by how much, an industry official with knowledge of the matter who declined to be identified said on June 10. Al- Hayat, citing senior officials, reported earlier that the kingdom will boost output to 10 million barrels a day in July from the current 8.8 million. “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.” 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. China’s industrial production growth may have slowed to 13.1 percent in May from 13.4 percent in April, a separate Bloomberg survey showed. Consumer price inflation, also scheduled for tomorrow, may have accelerated to 5.5 percent from 5.3 percent. Machinery Orders 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. 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 Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

Source