Oil declined for a third day in New York as signs the U.S. economy is slowing countered speculation the world’s biggest crude consumer will solve its debt crisis. Oil fell as much as 0.7 percent, paring earlier gains, as concern shifted to the slowing U.S. recovery after the House approved legislation to raise the debt limit, a day before a possible default. A report today is forecast to show personal spending stalled in June and a gauge of manufacturing yesterday weakened to a two-year low. U.S. crude inventories probably climbed for a second week, according to a Bloomberg survey before a government data is released tomorrow. “Although the debt-ceiling situation seems to have been resolved, these weak macro-indicators out of the U.S. have overshadowed it and that’s what’s causing some weakness in the oil price,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts crude will average $98 a barrel in the third quarter. Crude for September delivery dropped as much as 68 cents to $94.21 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.22 at 5:14 p.m. in Sydney today. It earlier rose as much as 56 cents, or 0.6 percent, to $95.45. The contract yesterday fell 81 cents to $94.89, the lowest since June 29. Prices are 16 percent higher the past year. Brent oil for September settlement dropped 91 cents to $115.90 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $21.57 a barrel to New York futures, compared with a record close of $22.63 on July 14. U.S. Stockpiles An Energy Department report tomorrow may show U.S. crude inventories climbed 1.5 million barrels in the seven days ended July 29, according to the median of nine analyst estimates in a Bloomberg News survey. Gasoline supplies probably rose 500,000 barrels, the survey shows. Oil in New York may fall as low as $92.50 a barrel, dropping to the bottom of a “long-term channel,” before any rally above $100 can be sustained, according to Societe Generale SA. Futures may decline in the coming days to the bottom of an upward-sloping channel that started in February 2009, said Stephanie Aymes, a cross-commodity technical analyst at France’s second-largest bank by market value. New York futures slipped yesterday after a gauge of U.S. manufacturing showed growth at the slowest pace in two years. The Tempe, Arizona-based Institute for Supply Management said its factory index decreased to 50.9 in July from 55.3 in June. Consumer Spending Asian stocks fell the most in three weeks. The MSCI Asia Pacific Index dropped 1.6 percent, the most since July 12, to 136.72. A Commerce Department report today may show U.S. purchases rose 0.1 percent in June after being little changed in May, according to the median estimate of 77 economists surveyed by Bloomberg News. Personal incomes probably increased 0.2 percent in June, the smallest gain in seven months. Tropical Storm Emily was moving quickly westward in the Caribbean Sea and was expected to strengthen, the National Hurricane Center said in a statement. The Dominican Republic issued a tropical storm warning, it said. Hurricane Eugene, 435 miles (700 kilometers) south- southwest of Manzanillo, Mexico, moved west-northwestward at 13 mph with little change in strength, according to the National Oceanic and Atmospheric Administration. 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