BLBG:Oil Drops a Third Day on Signs of Economic Slowdown, Europe Debt Outlook
Oil fell for a third day in New York as investors speculated that fuel demand may falter amid signs of slowing global economic growth in Asia and debt crises in the U.S. and Europe.
Futures dropped as much as 0.7 percent, bringing their decline to 5.1 percent since trading at a five-month high on Nov. 16. Japan, the world’s third-biggest crude consumer, reported the first drop in exports in three months, and Singapore said economic growth may slow next year. Spain voted to replace its government, while a U.S. committee may say today it failed to agree on cutting the federal budget deficit.
“Fear that something really bad could happen in Europe, hence demand could fall, has been the main reason prices have been so subdued,” Amrita Sen, an analyst with Barclays Capital in London, said in a Bloomberg Television interview today.
Crude oil for January delivery fell as much as 64 cents to $97.03 a barrel in electronic trading on the New York Mercantile. The contract was at $97.33 a barrel, down 34 cents, at 3:20 p.m. Singapore time. Front-month prices dropped 1.6 percent last week and are 6.5 percent higher this year.
Brent oil for January settlement was at $107.55 a barrel, down 1 cent on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas crude was at $10.28, up from $9.89 on Nov. 18. The spread reached a record $27.88 on Oct. 14.
Oil Rally
Investors should be “cautious” about a rally in oil prices last week, Sen said. New York futures surged 3.2 percent to settle at $102.59 a barrel Nov. 16 after Enbridge Inc. and Enterprise Products Partners LP said they would reverse the Seaway pipeline to bring crude to the U.S. Gulf Coast from Cushing, Oklahoma, where there is a supply bottleneck.
“You need a lot more pipelines to really alleviate the problem,” Sen said. “It’s one pipeline that’s been reversed and if you look at the other pipeline projects that were supposed to come online, they’ve all been canceled.”
Saudi Arabian Oil Minister Ali Al-Naimi said today in Riyadh he is “very happy” with current crude prices. October oil output in Saudi Arabia, OPEC’s biggest producer of crude, was 9.4 million barrels a day, similar to September, he said yesterday. The Organization of Petroleum Exporting Countries meets Dec. 14 to decide whether to change output quotas.
“December will be a very comfortable meeting,” OPEC Secretary-General Abdalla el-Badri told reporters in Riyadh. “You will not see the friction that you saw last time.”
Prices retreated today after Japan’s Ministry of Finance said exports fell 3.7 percent in October from a year earlier. The median estimate of 29 economists surveyed by Bloomberg News was for a 0.3 percent decline. Singapore’s economy may grow 1 percent to 3 percent in 2012 after expanding 5 percent this year, the nation’s trade ministry said in a statement.
Spain, U.S.
Mariano Rajoy won the biggest parliamentary majority in a Spanish election in almost 30 years and told Spaniards to brace for difficult times as the nation fights to avoid being overwhelmed by the debt crisis.
The U.S. deficit-cutting congressional supercommittee is unlikely to salvage talks on at least $1.2 trillion in federal budget savings, a Democratic aide said in an e-mail yesterday. The aide wasn’t authorized to discuss internal matters and declined to be identified.
“The market got ahead of itself a little too quickly,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “There are still issues in Europe and there appear to be problems with the supercommittee.”
Hedge-fund managers and other large speculators increased their net-long position in crude futures in the week ended Nov. 15, the Commodity Futures Trading Commission said Nov. 18.
Managed-money bets that prices will rise, in futures and options combined, outnumbered short positions by 216,075 futures, the Washington-based regulator said in its weekly Commitments of Traders report. Net long positions rose by 12,110 contracts, or 5.9 percent, from a week earlier.
To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
