Oil dropped the most in three weeks in New York as speeches yesterday by President Barack Obama and Federal Reserve Chairman Ben S. Bernanke failed to boost confidence in the world’s largest economy. Crude tumbled as much as 3.8 percent after Bernanke stopped short of outlining new plans to revive growth. Obama, speaking before a joint session of Congress, demanded that lawmakers act to spur spending, stem layoffs and cut taxes. Equities and the euro fell as European bank and sovereign credit risk surged to all-time highs on concern that Greece’s debt crisis will worsen. “Bernanke didn’t give any further insight into stimulus measures, and Obama’s speech has been received very tepidly, which continues to weigh on concerns about the U.S. economy,” said Matt Smith, a commodities analyst for Summit Energy Services Inc. in Louisville, Kentucky. “This is dominating the move in the crude market.” Crude for October delivery dropped $3.22, or 3.6 percent, to $85.83 a barrel at 12:13 p.m. on the New York Mercantile Exchange. The decline was the largest since Aug. 18. Prices are down 0.7 percent this week and 6.1 percent this year. Brent for October settlement declined $2.87, or 2.5 percent, to $111.68 a barrel on London’s ICE Futures Europe exchange. Bernanke told economists yesterday that the Fed has measures at hand and is “prepared to employ these tools as appropriate” when policy makers meet this month. Obama challenged Congress to pass a $447 billion jobs plan “right away” that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners. Euro Falls German Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event Greece fails to meet the terms of its aid package and defaults, three coalition officials said. Oil also fell as a declining euro undermined the appeal of dollar-denominated commodities. The euro fell 1.7 percent to $1.365 in New York, the lowest level since February. “The macro-economic data looks more bleak and so the demand side is acting as a capping mechanism,” said Andy Sommer, a senior trader at EGL AG in Dietikon, Switzerland, who predicts Brent will end the year at about $115 a barrel. The Standard & Poor’s 500 Index fell 2.7 percent to 1,153.58, erasing its weekly gain. The Dow Jones Industrial Average dropped 2.8 percent to 10,977.11. U.S. Demand “There are two critical factors dominating the outlook for the oil markets at this time, what global economic developments are doing to demand and the prospects for a pickup in Libyan oil exports,” according to a report published today by Deutsche Bank analysts including Adam Sieminski, the company’s Washington-based chief energy economist. U.S. total products supplied as averaged over four weeks fell 1.2 percent to 19.4 million barrels a day in the period to Sept. 2, according to an Energy Department report yesterday. It was the second week showed the measure of demand in the world’s largest energy-consuming country had fallen after four weeks of increases. Libya may export a crude-oil cargo this month for the first time since March from the country’s west as the holder of Africa’s biggest oil reserves rebuilds production after deposing ruler Muammar Qaddafi. An 80,000-metric-ton cargo of crude is being offered for shipment from the port of Mellitah this month, three people with direct knowledge of the transaction said yesterday. The oil, equal to 600,000 barrels, will be loaded from Sept. 15 to 17, the people said, declining to be identified because the consignment has yet to be publicly announced. Tropical Storm Nate Tropical Storm Nate, 125 miles (200 kilometers) west of Campeche, Mexico, is forecast to move toward the Mexican coast, according to a National Hurricane Center advisory issued before 11 a.m. in New York. Top winds were 65 miles an hour, under the 74 mph threshold for a hurricane. Petroleos Mexicanos, the state-owned oil company, said three Gulf crude export terminals were closed yesterday, Coatzacoalcos, Dos Bocas and Cayo Arcas, according to a weather bulletin on the website of Mexico’s Merchant Marine. Fourteen of 28 analysts, or 50 percent, of analysts in a Bloomberg News survey forecast oil prices will decline next week amid heightened concern that global economic growth is slowing. Seven respondents, or 25 percent, predicted prices will increase and seven estimated there will be little change during the period. Last week 50 percent of surveyed analysts projected a drop. Oil volume in electronic trading on the Nymex was 374,032 contracts as of 12:07 p.m. in New York. Volume totaled 790,112 contracts yesterday, 16 percent above the average of the past three months. Open interest was 1.5 million contracts. To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net. To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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