BLBG: Oil Falls As Declining U.S. Retail Sales Signal Slowing E
Oil dropped in New York after U.S. retail sales declined in May, a signal that the economy of the world’s largest crude-consuming nation is cooling.
Futures fell as much as 1.4 percent as Commerce Department figures showed that sales decreased for a second month. OPEC will probably leave its output target unchanged at a meeting tomorrow, two delegates from Middle Eastern member countries said. A government report will probably show that U.S. supplies dropped for a second week, according to a Bloomberg survey.
“The market is down because the retail sales numbers point to softening demand,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It looks like OPEC is going to roll over their quota so we will continue to see them produce ample amounts of oil.”
Crude oil for July delivery fell 39 cents, or 0.5 percent, to $82.93 a barrel at 10:15 a.m. on the New York Mercantile Exchange. Prices are down 16 percent this year.
Brent oil for July settlement increased 39 cents, or 0.4 percent, to $97.53 a barrel on the London-based ICE Futures Europe exchange. July futures expire tomorrow. The more actively traded August contract was down 28 cents, or 0.3 percent, at $97.25.
Retail sales slipped 0.2 percent last month, following a similar decline in April that was previously reported as a gain.
OPEC Output
Saudi Arabia, Kuwait, Qatar and the United Arab Emirates would like to raise the output ceiling by 500,000 barrels a day, an Organization of Petroleum Exporting Countries delegate said yesterday, declining to be identified because member countries are still in talks. Iran, facing a European Union embargo on its oil exports from July 1, and Venezuela have been joined by Iraq and Angola in warning that supplies are excessive.
Abdalla El-Badri, OPEC’s secretary-general, said today in Vienna that “there is some oversupply in the market” for oil.
An Energy Department report today may show that U.S. crude oil supplies decreased 1.5 million barrels, according to the median estimate of 12 analysts surveyed by Bloomberg News. The department is scheduled to release its weekly report at 10:30 a.m. in Washington.
“There’s still an overhang in crude inventories in the U.S. and stocks have built globally in the first half of the year,” said Gareth Lewis-Davies, an analyst at BNP Paribas SA in London. “The market is being affected, as with other commodities, by swings in trader risk aversion.”
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
