BLBG: Crude Oil Declines a Second Day on Concerns Recovery Stalling
Oil declined for a second day in New York on speculation that the global recovery may stall and crimp fuel consumption.
Crude oil slipped from near its highest level in 11 weeks as European equity indexes pared gains on losses among health- care and food companies. The U.S. economy probably expanded at a slower pace in the second quarter as the trade deficit swelled, economists said before reports this week.
“We are bumping up against resistance again around $78,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “It’s going to take better macroeconomic news or perhaps storm activity in the Gulf of Mexico to spring prices from their narrow trading range.”
Oil for September delivery dropped as much as 73 cents, or 0.9 percent, to $78.25 a barrel in electronic trading on the New York Mercantile Exchange. It was at $78.44 as of 12.45 a.m. London time. The contract earlier rose to $79.31 a barrel. Brent crude for September settlement on ICE Futures Europe exchange was at $76.98.
On July 22, the New York contract settled at $79.30 a barrel, the highest level since May 5. Futures have gained 16 percent in the past year.
The Stoxx Europe 600 Index fell 0.2 percent to 255.55 at 11:43 a.m., having previously increased as much as 0.5 percent.
“It’s still a case of U.S. demand not being particularly strong and that’s a reflection really of a pretty tepid U.S. economic recovery,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney.
Tropical Storm Bonnie dissipated near the U.S. Gulf Coast at the weekend, sparing refineries and offshore production operations. BP Plc vessels returned to work in the area to permanently plug a damaged well, the source of the largest oil spill in U.S. history.
Hedge-fund managers and other large speculators increased their net-long position in New York crude futures to a three- week high, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 36,145 contracts in the week ended July 20, up 4.3 percent from a week earlier.
-- Editors: Raj Rajendran, Rob Verdonck.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
