By Christian Schmollinger June 18 (Bloomberg) -- Oil fell for a second day in New York amid doubts about the pace of the economic recovery in the U.S., the world’s largest energy consumer, after an increase in jobless claims and a manufacturing slowdown. Crude extended yesterday’s 1.1 percent drop after the Labor Department said the number of Americans seeking jobless benefits last week climbed to a one-month high. U.S. fuel consumption fell 0.9 percent to the lowest level in five weeks in the seven days ended June 11, the Energy Department reported June 16. “The U.S. economy is facing a major structural adjustment in the wake of the financial crisis and subsequent economic slump,” said Toby Hassall, a research analyst at CWA Global Markets Ltd. “The U.S. is still the largest consumer of petroleum, so a lack of recovery in fuel demand there will have an impact on the oil market.” Crude oil for July delivery fell as much as 58 cents, or 0.8 percent, to $76.21 a barrel on the New York Mercantile Exchange. It was at $76.27 at 2:45 p.m. Singapore time. The contract lost 88 cents to settle at $76.79 yesterday. Futures have dropped 3.9 percent this year. Prices are up 3.4 percent this week, poised for a second week of gains. Initial jobless applications increased by 12,000 to 472,000 in the week ended June 12. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. The number of people receiving unemployment insurance rose, while those getting extended benefits dropped. Brent crude for August settlement was at $78.50 a barrel, down 18 cents, on the ICE Futures Europe exchange in London at 2:42 p.m. Singapore time. The contract rose 54 cents, or 0.7 percent, to $78.68 a barrel yesterday. Crude Inventories U.S. oil inventories were 8.4 percent above their five-year average last week, an increase from 7.3 percent the week before, the Energy Department said on June 16. Supplies gained 1.69 million barrels, or 0.5 percent, to 363.1 million last week, the department said. It was the first increase in three weeks as imports climbed and refinery operations declined. Supplies at the Cushing, Oklahoma, delivery point for the New York futures, climbed 194,000 barrels to 37.6 million, near the record of 37.9 million. This gain has depressed West Texas oil relative to Brent, with the North Sea grade for August trading at an 90-cent premium to the corresponding U.S. contract. It was at a $1.08 discount on June 14. “The high inventories will certainly feed into the market,” said CWA’s Hassall. ‘You’re not going to see markets rising unchecked as long as we have these ample inventories.” Drilling Moratorium Global oil production could fall by 800,000 to 900,000 barrels a day if a moratorium on deepwater drilling spreads beyond the U.S., Nobuo Tanaka, executive director of the International Energy Agency, said today. Tighter regulations because of the BP Plc oil spill at Macondo field in the Gulf of Mexico may delay exploration projects, Tanaka said in the western Japanese city of Fukui. “The longer the spill lasts, the more pressure there will be on the Obama administration to tighten regulation,” said Hassall. “So we’re not seeing too much impact at the front end of the forward curve, but at the back end certainly.” The premium for oil for delivery in June 2018 has climbed 60 percent since the April 20 accident at BP’s Macondo field to $17.80 a barrel over the July 2010 contract. Oil may rise next week after U.S. gasoline consumption climbed to a nine-month high, a Bloomberg News survey showed. Eleven of 21 analysts, or 52 percent, forecast crude will increase through June 25. Six respondents, or 29 percent, predicted futures will be little changed and four said prices will decline. Last week, 42 percent of analysts said the market would gain. To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

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