Crude oil fell, retreating from a six-month high of $60 a barrel earlier this week, on concern the global economic recovery may falter, reducing demand for fuel. Crude futures may decline next week as the global recession saps demand and bolsters U.S. supplies, a Bloomberg News survey of analysts shows. Europe’s economy contracted at the fastest pace in at least 13 years in the first quarter, the European Union said today. The International Energy Agency yesterday forecast the biggest contraction in world oil use since 1981. “It is still a pretty bad demand environment. I can’t see prices can go too far up,” said Thina Saltvedt, an oil analyst at Nordea Bank AB in Oslo. “The recent rise in prices has been based on optimism,” rather than market fundamentals, she said. Crude oil for June delivery fell as much as $1.31, or 2.2 percent, to $57.31 a barrel in electronic trading on the New York Mercantile Exchange and traded at $57.91 at 1:58 p.m. London time. Oil reached $60.08 on May 12, the highest intraday price since Nov. 11. Brent crude for July settlement was down 93 cents at $57.66 a barrel on London’s ICE Futures Europe exchange. The June Brent contract expired yesterday at $56.69 and the June Nymex crude contract will cease trading on May 19. Oil prices also fell today as the dollar strengthened against the euro, reducing the appeal of oil as an inflation hedge for investors. The U.S. currency traded at $1.3525 against the euro at 1:23 p.m. in London, versus $1.3639 yesterday. Stock Market Influence The oil market “is very much influenced by the stock markets and by what is happening with the dollar too,” said Robert Montefusco, a broker at Sucden (U.K.) Ltd. in London. First-quarter gross domestic product in the 16-member euro region dropped 2.5 percent from the fourth quarter, the European Union’s statistics office in Luxembourg said today. That’s the biggest contraction since the euro-area GDP data were first compiled in 1995, and exceeded the 2 percent decline economists expected in a Bloomberg News survey. In a separate Bloomberg survey, 18 out of 30 analysts forecast oil prices will fall next week, while six expect an increase and six expect the market to be little changed. Oil futures are down 1.4 percent this week even as a May 13 Energy Department report showed U.S. crude-oil supplies fell 4.63 million barrels to 370.6 million last week, the first drop since February. Inventories are still 18 percent higher than the five-year average for that week and near the highest level since 1990. Fuel Consumption Total U.S. daily fuel demand averaged 18.2 million barrels in the four weeks ended May 8, down 7.9 percent from a year earlier, the Energy Department report showed. Gasoline demand averaged 9 million barrels in the same period, down 1.2 percent from a year earlier. The IEA yesterday cut its 2009 global demand estimate to 83.2 million barrels a day, which is 3 percent less than in 2008 and 230,000 barrels a day lower than last month’s forecast. OPEC and the U.S. Energy Department also reduced their 2009 outlooks this week. “Oil fundamentals are crying out for lower numbers,” David Hufton, managing director of PVM Oil Associates Ltd., said in a report today. “If both stock market optimism and gasoline technicals flounder, we will then have the ingredients for a rapid pull back to $50 a barrel and below.”

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