BLBG: Crude Oil Falls to $66 in New York, 10% Below This Year’s High
July 3 (Bloomberg) -- Crude oil futures in New York fell below $66 a barrel, a 10 percent decline from this year’s high, marking a market “correction.”
Crude oil is set for a third weekly drop after U.S. unemployment rose to the highest in almost 26 years, signaling the world’s largest energy user remains mired in recession. Prices may drop again next week on speculation that U.S. fuel inventories will climb as the weak economy curbs demand, according to a Bloomberg News survey of analysts.
“It has been a double whammy for crude oil,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “You’ve got a stronger dollar and weaker- than-expected economic data, so that was a huge catalyst to start selling crude.”
Crude oil for August delivery fell $1.10, or 1.7 percent, to $65.63 a barrel at 1:30 p.m. in electronic trading on the New York Mercantile Exchange. Oil reached a year-to-date high of $73.38 on June 30.
The dollar posted a weekly gain against the euro, making oil less attractive as a hedge against a weakening U.S. currency. The dollar traded at $1.3978 per euro as of 12:51 p.m. in New York, from $1.4003 yesterday, for a 0.5 percent appreciation this week.
Oil trading in New York is curtailed by the U.S. Independence Day holiday. There will be no floor trading today and electronic trading will be counted as part of the session on July 6.
Employment Decline
June’s employment decline was more than forecast and followed a 322,000 decrease in May. Payrolls were estimated to fall 365,000 after a 345,000 decline initially reported for May, based on the median of 79 economists surveyed by Bloomberg News.
The jobless rate jumped to 9.5 percent, the highest since 1983, from 9.4 percent. U.S. fuel supplies increased last week more than forecast.
“The data were much weaker than expected and that is the main reason behind the oil price movement,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “The physical oil market is still imbalanced. It is oversupplied and there is a lot of oil in the market.”
The Organization of Petroleum Exporting Countries is “satisfied” with the current oil price, OPEC President Jose Maria Botelho de Vasconcelos said today in Beijing.
The current price is “good for all of us, the consumers and the producers,” de Vasconcelos said. The world economy has recovered and “this price is a balanced price for us,” he told reporters at the Global Think Tank Summit.
