Oil declined for a third day in New York as concern that the European debt crisis will spread stoked speculation that fuel demand may falter. Futures fell as much as 0.9 percent, extending yesterday’s 1.1 percent drop, as soaring yields on Italian bonds heightened concern Europe’s third-largest economy won’t be able to finance its debt. Prices may fall below $94 a barrel in New York as the market approaches long-term technical support, according to data compiled by Bloomberg. The Organization of Petroleum Exporting Countries will release its monthly report today. “Risk aversion is still very much in play,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “It’s very much Europe and there’s lot of attention on Italy now. Today, there will be some energy focus with OPEC releasing its monthly data.” Crude for August delivery fell as much as 82 cents to $94.33 a barrel in electronic trading on the New York Mercantile Exchange, and was at $94.44 at 1:41 p.m. Sydney time. The contract yesterday lost $1.05 to $95.15, the lowest since July 1. Prices are 26 percent higher the past year. Brent oil for August settlement declined as much as 95 cents, to 0.8 percent, to $116.29 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.06 a barrel to U.S. futures, compared with a record close of $22.29 on June 15. Fuel Supplies Front-month futures in New York may decline to the 200-day moving average, at $93.76 today. A settlement below technical support usually means prices will drop further. An Energy Department report tomorrow may show U.S. gasoline supplies increased for the first time in four weeks, according to the median of 10 analyst estimates in a Bloomberg News survey. They probably climbed 500,000 barrels last week from 212.5 million, the survey shows. Crude stockpiles dropped 2.3 million barrels, the Bloomberg survey shows. That would be the sixth week of declines. Inventories of distillate fuel, a category that includes heating oil and diesel, probably rose 800,000 barrels, according to the survey. Nine of the analysts anticipated a gain and one forecast a decline. The yield on 10-year Italian bonds rose 41 basis points to close at 5.68 percent yesterday, the highest in more than a decade, pushing the yield premium investors demand to hold the debt over German bunds to a euro-era record of 301 basis points. “Global debts seem to be hanging over the market like the Sword of Damocles,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said in an e-mailed note today. Italy faces 175 billion euros ($244 billion) in debt maturities this year and has 1.6 trillion euros of bonds outstanding, the world’s third-largest debt pile after the U.S. and Japan. 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 at akwiatkowsk2@bloomberg.net

Source