BLBG: Crude Oil Heads for Biggest Weekly Drop Since September on Europe Outlook
Crude fell, heading for the biggest weekly decline since September, on concern that European economic growth will slow, curbing fuel demand.
Futures dropped as much as 1 percent as the French national statistics office Insee forecast the economy will shrink this quarter and next, suggesting that the euro area’s second-largest economy is in a recession. Exports from the euro area dropped in October, led by declines in Germany and Spain, according to the European Union’s statistics office.
“Obviously, the market is going to be concerned about Europe for a while,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. “Oil is still in a down trend in the short term, so I won’t be surprised if prices fall to something close to $90.”
Crude oil for January delivery slid 88 cents, or 0.9 percent, to $92.99 a barrel at 12:01 p.m. on the New York Mercantile Exchange. The contract is down 6.5 percent this week, heading for a second weekly decline. Prices are up 1.8 percent this year after climbing 15 percent in 2010.
Brent oil for February settlement fell 66 cents, or 0.6 percent, to $102.94 a barrel on the London-based ICE Futures Europe exchange. The January contract expired yesterday.
The French economy will shrink 0.2 percent in the fourth quarter and 0.1 percent in the first quarter before expanding 0.1 percent in the following three months, Paris-based Insee said yesterday.
European Exports
Exports from the euro region dropped a seasonally adjusted 1.9 percent in October from September, when they fell 1.1 percent, the EU’s statistics office in Luxembourg said today. Imports dropped 0.7 percent and the trade surplus shrank.
Oil was higher earlier as U.S. stocks and the euro gained. The U.S. currency dropped against the euro after Luxembourg’s Jean-Claude Juncker said Europe should meet a deadline for arranging loans with the International Monetary Fund as part of a crisis-fighting package.
A weaker dollar boosts oil’s appeal as an investment alternative.
The Italian government won a confidence vote in Parliament on a 30 billion-euro ($39 billion) emergency budget plan.
“The oil market is looking pretty weak compared to equities and the euro today,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The big question is whether the bulls have enough ammo to push the market higher.”
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net Moming Zhou in New York at Mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
