BLBG: Crude Declines on Signs of Slowing Fuel Demand in U.S., China
Oil fell in New York on signs that fuel demand in the U.S. and China, the two largest energy consumers, is faltering as the economic recovery slows.
Crude fell below $80 a barrel for the first time in a week after a report showed that confidence among U.S. small businesses fell in July to the lowest level in four months. An Energy Department report tomorrow is likely to show that gasoline inventories remain near their highest in six weeks, according to a Bloomberg survey, even as the summer driving season reaches its peak. China’s crude imports slumped 15 percent in July from June, preliminary government data showed.
“The weakness of gasoline is one of the most compelling reasons for expecting crude prices to stay range-bound and probably below $80,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “Poor gasoline demand is a visible indicator of the lack of a real recovery.”
Crude oil for September delivery dropped as much as $1.51, or 1.9 percent, to $79.97 a barrel in electronic trading on the New York Mercantile Exchange, the lowest price since Aug. 2. It was at $80.01 at 1 p.m. London time. Brent crude oil for September settlement fell $1.62, or 2 percent, to $79.37 a barrel on the London-based ICE Futures Europe Exchange.
China, the world’s largest energy consumer, imported 19 million tons of crude in July, down from a record 22.3 million tons in June, according to data today from the General Administration of Customs.
The U.S. Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington.
Gasoline Stockpiles
Gasoline inventories were probably unchanged from the week before at 223 million barrels, according to a Bloomberg survey of analysts. Supplies have increased for the past six weeks. Stockpiles of distillate fuel, which includes heating oil and diesel, may have climbed 1.5 million barrels from 169.7 million.
Crude stockpiles in the U.S. probably declined 2 million barrels last week, the survey showed. Refineries probably ran at 90.7 percent, down 0.5 percentage point from the prior week, according to the survey.
The Energy Department’s Short-Term Energy Outlook, a monthly report, will be released today.
The department’s short-term outlook on July 7 raised the forecast for 2010 oil consumption to 85.82 million barrels a day from 85.51 million. Since then, concerns about the strength of the economic expansion have increased amid a contraction in U.S. employment.
The International Energy Agency, a Paris-based adviser to 28 oil-consuming nations, will publish its monthly report on supply and demand levels tomorrow.
“In light of the weaker economic data, there is a stronger likelihood that the agencies will cut their forecasts of oil demand and that could add to pressure on prices,” said Serene Lim, a commodity strategist at Australia and New Zealand Banking Group Ltd. in Singapore.
