Oil dropped for a second day in New York, extending last week’s 0.4 percent decline, on signs of a slowdown in U.S. demand and before OPEC meets to decide production quotas. Futures slipped as much as 0.4 percent following a Labor Department report that showed the U.S. jobless rate climbed to the highest level this year. The Organization of Petroleum Exporting Countries is unlikely to change targets when it meets June 8, according to a Bloomberg News survey of 30 analysts conducted May 24-31. Prices advanced earlier as unrest in Yemen renewed concern that Middle East supplies may be disrupted. “The big concern is what’s happening in terms of the global economy,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted crude will average $100 this year. Oil is “within a range. The OPEC meeting is coming up and I don’t expect too much,” he said. Crude for July delivery fell as much as 37 cents to $99.85 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.94 at 4:12 p.m. Sydney time. Futures rose as much as 46 cents to $100.68 earlier. Prices are 40 percent higher the past year. Brent crude for July delivery lost as much as 53 cents, or 0.5 percent, to $115.31 a barrel on the London-based ICE Futures Europe exchange, after climbing 30 cents, or 0.3 percent, on June 3. Prices are 60 percent higher the past year. Middle East Turmoil The European benchmark contract has advanced 22 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya. In Yemen, hundreds of thousands cheered the departure of wounded President Ali Abdullah Saleh to Saudi Arabia even as government spokesmen said he would soon return after receiving medical treatment. Syrian forces killed 25 protesters in a village in the northern part of the country, Mahmoud Merhi, the head of the Arab Organization for Human Rights, said yesterday. Oil’s price volatility is hurting consumers and the swings in prices must be reduced, Total SA Chief Executive Officer Christophe de Margerie said in Kuala Lumpur today. Brent traded at a premium of $15.33 a barrel to U.S. futures, from $15.62 on June 3. The difference between front- month contracts in London and New York reached a record $19.54 on Feb. 21. The spread averaged 76 cents last year. “All eyes will be on OPEC’s meeting,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. Some delegates are “suggesting OPEC would lift official production targets if forecasts were for greater crude demand in the second half of 2011,” he said. U.S. Economy The unemployment rate in the U.S. unexpectedly climbed to 9.1 percent in May and payrolls grew at the slowest pace in eight months, showing employers are losing confidence as the economy slows. Employers added a less-than-projected 54,000 jobs last month, after a revised 232,000 gain in April that was smaller than initially estimated. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. The U.S. trade deficit probably widened in April to a 10- month high, reflecting higher crude oil costs that have since retreated, economists said before a report this week. The gap expanded to $48.9 billion from the $48.2 billion shortfall in March, according to the median of 61 estimates in a Bloomberg News survey before the Commerce Department’s June 9 report. Other figures may show prices of goods from abroad decreased in May by the most in almost a year, showing the surge in commodity costs is fading. Oil Bets Hedge-fund managers and other large speculators decreased their net-long position in crude futures in the week ended May 31, according to Commodity Futures Trading Commission data. Managed money bets that prices will rise, in futures and options combined, outnumbered short positions by 224,441 futures, the Washington-based regulator said in its weekly Commitments of Traders report. Net long positions fell by 1,236 contracts, or 0.55 percent, from a week earlier. TransCanada Corp. started transporting crude oil through its 591,000 barrel-a-day Keystone pipeline after it was shut because of a leak, the second unplanned closure in a month. The system resumed oil flows June 5 after the U.S. Pipelines and Hazardous Materials Safety Administration approved the company’s restart plan, Calgary-based TransCanada said in a statement dated yesterday. The company shut the pipeline on May 29 after a fitting started leaking at a pump station in Doniphan County, Kansas, about 60 miles (97 kilometers) northwest of Kansas City, Missouri. The incident spilled less than 10 barrels of oil, TransCanada said. Crude at $75 to $80 a barrel is a reasonable price, Shamsul Azhar Abbas, chief executive officer of Malaysia’s state oil company, Petroliam Nasional Bhd., said in Kuala Lumpur today. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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