By Mark Shenk July 1 (Bloomberg) -- Crude oil fell the most in almost five months on concern growth in the U.S. and China will slow, curbing demand in the two largest energy-consuming countries. Oil slipped as much as 4.3 percent after U.S. manufacturing expanded at a slower pace last month and the Labor Department reported that more Americans applied for jobless benefits last week. China’s manufacturing grew at a reduced pace for a second month in June, adding to signs the fastest-growing major economy is cooling, according to a survey. “The market is very sensitive right now,” said David Greely, head of energy research at Goldman Sachs Group Inc. in New York. “There’s a much more negative view of the outlook over the last two months. There definitely are concerns about growth.” Crude oil for August delivery declined $3.14, or 4.2 percent, to $72.49 a barrel at 10:42 a.m. on the New York Mercantile Exchange. The contract touched $72.36, the lowest level since June 9. Futures in New York are down 8.7 percent this year and lost 9.7 percent in the second quarter. The market is in its longest pullback since a six-day drop that ended on May 18. Brent crude for August delivery slipped $3.24, or 4.3 percent, to $71.77 per barrel on the London-based ICE Futures Europe exchange. Jobless Claims U.S. initial jobless claims increased by 13,000 to 472,000 in the week ended June 26, according to the department. Economists forecast applications would fall to 455,000 from an initially reported 457,000 for the prior week, according to the median of 46 projections in a Bloomberg survey. The Labor Department tomorrow may report payrolls fell by 125,000 in June, reflecting cuts in temporary census workers as the decennial survey nears completion, economists surveyed by Bloomberg forecast. Private payrolls, which are more revealing of labor-market conditions, probably rose by 110,000 after a 41,000 gain the prior month. “Everyone is waiting for tomorrow’s unemployment number,” said Dan Flynn, a trader at PFG Best in Chicago. “If it’s bad crude will head for $65. It all hinges on the report.” “We continue to expect the economy to slow down in the second half of the year, but still expect that global economic growth in 2010 and 2011 will be above average,” Greely said. Fuel Supplies U.S. fuel consumption declined 2.7 percent to 19 million barrels a day, the lowest level since April, according to the department. “The disappointing economic news has allowed the market to concentrate on the fundamental picture,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Yesterday’s unexpected fuel supply increase and weak demand numbers were very negative.” Crude Oil Inventories Crude stockpiles fell 2.01 million barrels last week to 363.1 million, partly on reduced imports, the Energy Department report showed. Tropical Storm Alex is losing power after coming ashore overnight in Mexico after forcing the shutdown of a quarter of the U.S.’s Gulf of Mexico oil production. At its height, Alex reached Category 2 storm status with winds of 100 mph (161 kph), the earliest Atlantic hurricane since 1995 and the first of the 2010 season. --With assistance from Grant Smith in London and Brian K. Sullivan in Boston. Editors: Joe Link, Charlotte Porter To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net. To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Source