Oil fell, dipping below $80 a barrel in New York for the first time in more than a week, on concern that slower economic growth will erode fuel demand. Brent crude traded at a record premium to U.S. prices. Crude pared some of its losses in New York and rose in London as the dollar weakened, making commodities more attractive. U.S. crude supplies unexpectedly rose last week, the Energy Department said Aug. 17. Supply disruptions in the North Sea and Africa have boosted Brent to more than $26 a barrel above New York futures, which have tumbled 29 percent from their peak this year. “Speculation about the debt burden in European countries may trigger a new round of risk aversion,” said Thina Saltvedt, an Nordea Bank AB analyst in Oslo, who predicts Brent will be unable to rebound beyond $118 a barrel this quarter. Crude for September delivery dropped as much as $3.21 to $79.17 a barrel in electronic trading on the New York Mercantile Exchange and was at $81.67 at 1:33 p.m. London time. Prices are down 4.4 percent for the week. The more actively traded October contract fell 68 cents to $81.83. Brent oil for October settlement was 74 cents higher at $107.73 after declining as much as $1.93, or 1.8 percent, to $105.06 a barrel on the London-based ICE Futures Europe exchange. Record Premium Brent’s premium has widened amid supply disruptions in the North Sea, Nigeria and Libya, in contrast to increasing stockpiles in the U.S. Brent, a benchmark grade for Europe, the Mediterranean and Africa, last traded at a discount to New York crude on Aug. 16, 2010. “There’s weakness across the euro zone and the possibility of a dip back into recession is now a material probability,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts U.S. futures will average $93 a barrel in the third quarter. U.S. oil inventories increased 4.23 million barrels to 354 million last week, the Energy Department said on Aug. 17. They were forecast to drop 500,000 barrels, according to a Bloomberg News survey of analysts. Supplies haven’t been disrupted by the weather as much as in previous years. The 2011 Atlantic storm season has set a record for the most tropical systems without a hurricane, according to Dennis Feltgen, a spokesman for the National Hurricane Center in Miami. Seven named storms have formed this year, a number the season usually doesn’t reach until Sept. 16. Ichimoku Cloud Oil is extending losses as futures drop below technical support at about $83.83 a barrel, according to data compiled by Bloomberg. That’s the lower of two leading-span lines marking a so-called Ichimoku cloud on the weekly technical chart. Crude fell to a four-year low of $32.40 in December 2008 about two months after breaching a similar support level at $88.83. Prices may extend their decline next week, a Bloomberg News survey showed. Sixteen of 38 analysts, or 42 percent, forecast a decline through Aug. 26. Last week, 41 percent of respondents projected a gain. Oil is being driven lower by financial markets, not by supply and demand, Qatar’s oil minister, Mohammed Saleh al Sada, said in Doha yesterday. Qatar, a member of the Organization of Petroleum Exporting Countries, pumped 810,000 barrels of oil in July, according to Bloomberg News estimates. “In view of the fact that oil is a strategic commodity, we are watching what is happening in global markets,” he said. Global Economy Citigroup Inc. cut its growth forecast for the U.S., joining Morgan Stanley in raising concern the global economy will slow. Data yesterday showed jobless claims rose and Philadelphia-area manufacturing shrank by the most since 2009. China will expand 8.9 percent this year, down from an earlier forecast of 9.1 percent, Deutsche Bank AG said in a report dated Aug. 17, citing the “shock” of a U.S. and European Union slowdown. Goldman Sachs Group Inc. said U.S. oil-demand data indicates the country may be warding off a recession, even as a drop in manufacturing raises the risk of a contraction in the world’s biggest economy. U.S. oil consumption in the past three weeks was the most for this time of year since before the 2008 financial crisis, analysts at the bank said. Oil inventories are also “becoming increasingly tight” in Europe and Asia because of slowing production growth, they said in a report dated yesterday. “Oil market data continues to suggest that the trajectory for crude oil prices is higher into 2012,” wrote the analysts, led by David Greely in New York. “Oil prices fall sharply on downdrafts of weak economic data, only to rise as oil prices remain too low to balance current supply and demand.” To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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