Oil slid from the highest close in two weeks in New York amid speculation that its biggest gain in more than a month was excessive. Tropical Storm Ernesto slowed as it headed westward in the Caribbean. Futures slipped as much as 0.8 percent after closing 4.9 percent higher on Aug. 3, the most since June 29. Prices finished last week with a gain of 1.4 percent after U.S. payrolls rose more than estimated and service industries expanded at a faster pace. Ernesto, located about 220 miles east of the Nicaragua and Honduras border, had winds of about 50 mph, down from 60 mph on Aug. 4, according to the U.S. National Hurricane Center. “This is a small correction after the massive move last Friday,� said Eugen Weinberg, head of commodity market research at Commerzbank AG in Frankfurt. “Brent near $110 is a bit excessive.� Oil for September delivery slid as much as 77 cents to $90.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.68 at 9:18 a.m. in London. It surged $4.27 to $91.40 on Aug. 3, the highest settlement since July 20. Prices are 8.2 percent lower this year. Brent crude for September settlement fell 15 cents, or 0.1 percent, to $108.79 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $17.84, compared with $17.54 on Aug. 3. Technical Resistance WTI is retreating after reaching technical resistance around $91.85 a barrel, data compiled by Bloomberg show. That’s the higher of two so-called leading span lines that define an “ichimoku cloud,� an area where buy orders tend to be clustered. Futures halted their gain near this line on Aug. 3. Hedge funds reduced bullish oil bets for the first time in three weeks before reports showing U.S. economic growth sent crude to its biggest gain since June. Money managers cut net- long positions by 2.6 percent in the seven days ended July 31, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Aug. 3. Wagers have dropped 50 percent from a 2012 high on Feb. 28. Oil futures rose on Aug. 3 after Labor Department data showed payrolls gained 163,000 in July compared with a forecast for a 100,000 increase by economists surveyed by Bloomberg News. The Institute for Supply Management’s non-manufacturing index unexpectedly climbed. Ernesto’s Trajectory Ernesto was moving west at 13 mph, the Miami-based center said in a web advisory at 2 a.m. local time today, down from 15 mph earlier. Some strengthening is forecast as it moves over the northwestern Caribbean Sea today and tomorrow, according to the advisory. The center of the storm is forecast to pass to the south of the Cayman Islands today and then strike the Yucatan Peninsula on a path that may take it into the southern Gulf of Mexico on Aug. 8, according to the hurricane center. The Gulf is home to 29 percent of U.S. oil production, 6.5 percent of the country’s natural-gas output and 40 percent of its refining capacity, according to the U.S. Energy Department. “The previous peak of around $93 for West Texas looms as a bit of a psychological resistance level for the market,� said Ric Spooner, a chief market analyst at CMC Markets in Sydney. The weakening of tropical storm Ernesto “takes away a potential supply disruption,� he said. South Sudanese officials will meet their Sudanese counterparts “soon� to conclude an oil deal and continue talks on security issues, said Pagan Amum, the south’s chief negotiator. South Sudan, which halted oil production in January amid a dispute with Sudan over transit fees, is able to resume production by September, he said in a statement published on the government’s website. At independence, South Sudan assumed 75 percent of the previous country’s 490,000 barrels a day in oil production. To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Ayesha Daya in Dubai at adaya1@bloomberg.net To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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