BLBG:Oil Heads For Third Weekly Loss on Debt Crisis, China Economy
Oil headed for a third weekly decline on concern that the European economic outlook and signs of a slowdown in China will reduce demand.
Prices fell as much as 1 percent after German Finance Minister Wolfgang Schaeuble said turmoil in the financial markets caused by Europe’s debt crisis may last another two years. Home prices in China fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts.
“People just aren’t convinced that we are going to see some decent growth in Europe anytime soon,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The latest news out of China suggests that they are not seeing good growth, and that will weigh on the oil market.”
Crude for June delivery fell 61 cents, or 0.7 percent, to $91.95 a barrel at 9:36 a.m. on the New York Mercantile Exchange. Prices have retreated 4.3 percent so far this week.
Brent oil for July settlement gained 4 cents to $107.53 a barrel on the London-based ICE Futures Europe exchange after falling to $106.40, the lowest intraday level this year.
“In 12 to 24 months, we’ll see a calming of financial markets,” Schaeuble said on France’s Europe 1 radio.
G-8 Meeting
Schaeuble’s comments came as Group of Eight leaders including German Chancellor Angela Merkel prepared to discuss Greece and its impact on the global economy. Silke Bruns, a Finance ministry spokeswoman, said today that the German government has a duty to prepare for a potential Greek exit from the euro zone.
The G-8 meeting begins tonight at the Camp David presidential retreat in rural Maryland.
Greece’s credit rating was downgraded one level late yesterday by Fitch Ratings amid concern that the country won’t be able to muster the political support needed to sustain its membership in the euro area.
“It’s pretty well known that whatever happens in Europe, it’s probably going to have a negative impact on the U.S. economy,” said Jacob Correll, a commodity analyst at Summit Energy Inc. in Louisville, Kentucky. “The momentum for the global crude complex in the short term is moving lower.”
To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
