Oil dropped from the highest in almost two weeks in New York after Germany’s economy all but stagnated in the second quarter, heightening concern that fuel consumption will diminish. Futures slid as much as 1.5 percent today as Germany’s Federal Statistics Office said gross domestic product, adjusted for seasonal effects, rose 0.1 percent from the first quarter. A report today may show U.S. housing starts and building permits fell in July. The Energy Department may say tomorrow U.S. crude oil stockpiles declined to a five-month low, according to a Bloomberg survey. “The overall picture is that worldwide economic activity is slowing down a bit, and of course that’s bearish for oil,” said Sintje Diek, an analyst at HSH Nordbank in Hamburg who correctly predicted in June that Brent prices would fall to $100 this summer. “There are fears the recovery in the euro zone will be very sluggish because of the debt crisis. Maybe we’ll see lower prices than $100.” Crude for September delivery declined as much as $1.27 to $86.61 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.75 at 9:35 a.m. London time. The contract yesterday gained 2.9 percent to $87.88, the highest settlement since Aug. 3. Prices have risen 15 percent in the past year. Brent oil for September settlement fell $1.13, or 1 percent, to $108.78 a barrel on the ICE Futures Europe in London. The European benchmark was at a premium of $22 to U.S. futures, compared with a record close of $23.79 on Aug. 10. Slower Growth “The U.S. economy is a little bit weaker than any of us were expecting at this time of the year and a lot of the indicators out of Europe have been weak as well,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $93 a barrel in the third quarter. “We all knew that it was going to take a long time for these areas to get back on their feet and there would be this lull in activity after all the stimulus had washed out.” Growth in China, the world’s second-biggest oil consumer, is slowing “significantly,” according to The Conference Board, a New York-based research organization. The nation’s expansion may cool to 9.2 percent in the third quarter from 9.5 percent in the previous three months, the China Securities Journal reported today, citing the State Information Center. Building Permits Slump Builders in the U.S., the world’s biggest crude consumer, broke ground on 600,000 homes at an annual rate in July, a 4.6 percent drop from June, according to the median estimate in a Bloomberg News survey of 77 economists before today’s report. Building permits, a sign of future construction, probably fell 1.9 percent. The Federal Reserve Bank of New York’s Empire State Index fell to minus 7.7 from minus 3.8 in July, a report showed yesterday. The median forecast in a Bloomberg News survey called for an index of zero, the dividing line between expansion and contraction. The bank’s six-month outlook gauge dropped to the third-weakest level on record. An Energy Department report tomorrow may show U.S. crude stockpiles declined as imports fell and refineries ran near the highest rates of the year, according to a Bloomberg News survey. Inventories dropped 750,000 barrels from 349.8 million in the seven days ended Aug. 12, according to the median of 10 analyst estimates in the survey. The fall would leave stockpiles at the lowest since the week ended March 4. Tropical Storm Gert was 250 miles (400 kilometers) northeast of Bermuda and was traveling north-northeast at 18 miles per hour, the National Hurricane Center said in an advisory at 11 p.m. Miami time. The storm is expected to begin weakening late today. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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