Crude dropped a third day in New York, the longest losing stretch since May, as a decrease in U.S. personal spending signaled that economic growth is slowing in the world’s biggest oil-consuming country. Futures fell as much as 1.5 percent after the Commerce Department in Washington said purchases slipped 0.2 percent in June, the first decline in almost two years. Congress approved a debt-limit compromise that prevents a U.S. default, sending the measure to President Barack Obama on the day the Treasury had warned the nation’s borrowing authority would expire. “The economy appears to be grinding to a halt,” said Phil Flynn, vice president of research at PFGBest in Chicago. “A slowing U.S. economy changes the demand outlook for oil. We may end up with a glut, not shortages, later this year.” Crude oil for September delivery fell $1.11, or 1.2 percent, to $93.78 a barrel at 12:55 p.m. on the New York Mercantile Exchange. Prices have climbed 15 percent in the past year. Brent oil for September settlement declined 51 cents, or 0.4 percent, to $116.30 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.52 a barrel to New York futures. The record spread based on closing prices is $22.63 on July 14. Consumer purchases were forecast to increase 0.1 percent, according to the median estimate of 77 economists surveyed by Bloomberg News. Incomes grew at the slowest pace since November and the savings rate climbed. Employment Outlook The U.S. probably failed to create enough jobs in July to cut unemployment, according to a Bloomberg News survey of economists before the Labor Department’s employment report on Aug. 5. “There’s been plenty of bad economic news,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’re going to be white-knuckling it until Friday when we will see if employment rose. That should be the next catalyst for a major move.” The Standard & Poor’s 500 Index fell 1.7 percent to 1,265.59, and the Dow Jones Industrial Average declined 1.3 percent to 11,971.36. The dollar rose 0.4 percent to $1.4192 against the euro, from $1.425 yesterday, after climbing to $1.4151, the highest level since July 21. A stronger U.S. currency reduces the appeal of dollar-denominated raw materials as an investment. “We’re tracking the dollar and equities,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. Debt Ceiling The Senate voted 74-26 for the measure, which raises the nation’s debt ceiling until 2013 and threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years. The House passed the plan yesterday. Federal Reserve policy makers may start weighing more steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts. During the first half of 2011, the Fed carried out a $600 billion program in asset purchases known as quantitative easing. Tropical Storm Emily is approaching the Dominican Republic in the Caribbean Sea on a path that may take it past Florida’s east coast on Aug. 6, the National Hurricane Center said today. Emily is 270 miles (435 kilometers) southeast of San Juan, Puerto Rico and stationary, according to an advisory issued by the U.S. National Hurricane Center at 11 a.m. in Miami. “Prices would be a lot lower if it weren’t for Emily and the prospect that the Fed might announce a new round of quantitative easing,” Flynn said. Inventories Tomorrow An Energy Department report tomorrow may show U.S. crude oil inventories climbed 1.5 million barrels last week, according to the median of 13 analyst estimates in a Bloomberg News survey. The American Petroleum Institute is scheduled to release its weekly supply totals at 4:30 p.m. today in Washington. “A rebound in the dollar and weaker equities will keep oil down until at least the inventory reports,” said Hamza Khan, an analyst with the Schork Group Inc., a consulting company in Villanova, Pennsylvania. Oil volume in electronic trading on the Nymex was 349,187 contracts as of 12:50 p.m. in New York. Volume totaled 689,962 contracts yesterday, the most since July 14 and 3 percent above the average of the past three months. Open interest was 1.54 million contracts. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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