Oil fell in New York, heading for a third weekly decline, on concern that volatility in financial markets will worsen an economic slowdown.
Futures slid as much as 1.3 per cent today, ending a two-day climb. Crude has traded from $US75.71 a barrel, a 10-month low, to as high as $US85.97 in intraday trading this week. Reports today may show manufacturing stalled in the euro region and Greece’s economy shrank. Prices surged yesterday after applications for US unemployment benefits unexpectedly slid to the lowest in four months.
“The biggest downside risk is that all this volatility cripples confidence,” said Ben Westmore, a minerals and energy economist at National Australia Bank, who predicts oil in New York will average $US98 a barrel in the third quarter. “There are continued concerns around Europe and sovereign debt and when you overlay that on weaker than expected macro data, it can cause people to fear for the worst.”
Crude for September delivery fell as much as $US1.08 to $US84.64 a barrel in electronic trading on the New York Mercantile Exchange. It was at $US84.81. Yesterday, the contract gained 3.4 per cent to $US85.72. Futures have lost 2.4 per cent this week and 7.2 per cent in 2011.
Brent oil for September settlement on the London-based ICE Futures Europe exchange dropped as much as 82 cents, or 0.8 per cent, to $US107.20 a barrel. The European benchmark contract was at a premium of $US22.65 to US futures, down from a record close of $US23.79 on August 10. The more actively traded October future was down 51 cents at $US107.31.
European meeting
French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to meet next week after concern that the euro-area debt crisis will spread rattled French markets. The leaders of Europe’s two largest economies will discuss economic governance of the 17-nation euro region in Paris on August 16, according to separate statements yesterday.
The euro extended a weekly drop against the dollar today before reports forecast to show that industrial production in Europe climbed 0.2 per cent in May and Greece’s gross domestic product declined 0.8 per cent in the second quarter.
Regulators in France, Spain, Italy and Belgium will impose bans on short-selling from today to stabilize equity markets after European banks plunged. Asian stocks pared earlier gains.
Export slump
The US trade deficit unexpectedly rose 4.4 per cent to $US53.1 billion in June from $US50.8 billion in the prior month, according to Commerce Department data yesterday. Exports slumped 2.3 per cent, the most since January 2009, as overseas demand for shipments of soybeans and plastics to industrial engines and generators decreased.
Confidence among US consumers dropped last week to the lowest since May as high earners, homeowners and those working full time turned more pessimistic, the Bloomberg Consumer Comfort Index showed yesterday.
Crude climbed yesterday after the number of applications for US unemployment payments fell 7000 in the week ended August 6 to 395,000, the fewest since early April.
Oil in New York may gain next week as US stockpiles decline and fuel demand increases, according to a Bloomberg News survey. Twelve of 29 analysts and traders, or 41 per cent, forecast crude will increase through August 19. Last week, 51 per cent of respondents predicted a decrease.
Prices may rebound as a “hammer” forms on the weekly candlestick chart, according to data compiled by Bloomberg. Futures rallied about 13 per cent in the six weeks after a similar technical pattern in May 2010.
