BLBG:Oil Slides From One-Month High As Demand Concern Prompts Selling
Oil slid from the highest close in a month in New York on speculation this week’s gains may have been excessive amid concern that a global economic slowdown will reduce demand.
Futures fell as much as 0.6 percent after advancing 13 percent in the three days through yesterday, the biggest gain since February 2011. Societe Generale SA cut its crude-price forecasts, citing ample supply and speculation that Europe’s crisis and a slowdown in China will curb investor demand for commodities. Iran convened a meeting with world powers in Istanbul in search of a diplomatic solution to the nation’s nuclear program.
“The oil market right now is actually awash with crude,” Victor Shum, the managing director of IHS Energy group in Singapore, said in a Bloomberg Television interview. “More traders see risks for prices to be on the downside. This rally is short lived and in the near term we may see prices move lower a bit.”
Crude for August delivery dropped as much as 56 cents to $87.10 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.25 at 1:13 p.m. Singapore time. The contract yesterday surged $3.91 to $87.66, the highest close since May 30. Prices are 12 percent lower this year. Floor trading will be closed today for the U.S. Independence Day holiday.
Brent oil for August settlement on the London-based ICE Futures Europe exchange was down as much as 61 cents, or 0.6 percent, at $100.07 a barrel. The European benchmark crude was at a premium of $12.89 to New York-traded West Texas Intermediate, from $13.02 yesterday.
Societe Generale predicted New York crude will average $84.17 a barrel in the third quarter and Brent will be $96.67, Michael Wittner, the New York-based head of oil-market research at the bank, said in a report e-mailed today. The bank earlier forecast $97.50 for WTI and $110 for Brent.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
