NEW YORK - Crude oil fell to a five-week low in New York and reached a record discount against Brent crude as a drop in US personal spending signaled growth is slowing in the world’s biggest oil-consuming country.
Futures dropped 1.2 percent after the Commerce Department in Washington said purchases slipped 0.2 percent in June, the first decline in almost two years.
The decrease in prices accelerated after President Obama signed a bill to raise the US debt limit by at least $2.1 trillion, averting by hours a first-ever US financial default.
“There’s a great deal of nervousness about the direction of the economy,’’ said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass. “All of the talk of a possible default has already done a lot of damage to consumer confidence. The economy wasn’t looking good before today, and now it’s looking worse.’’
Crude oil for September delivery fell $1.10 to $93.79 a barrel on the New York Mercantile Exchange, the lowest settlement since June 28. Prices have gained 15 percent in the past year.
Brent oil for September settlement declined 35 cents, or 0.3 percent, to end the session at $116.46 a barrel on the London-based ICE Futures Europe exchange.
Consumer purchases were forecast to increase 0.1 percent, according to the median estimate of 77 economists surveyed by Bloomberg News. Incomes grew at the slowest pace since November and the savings rate climbed.
“The economy appears to be grinding to a halt,’’ said Phil Flynn, vice president of research at PFGBest in Chicago.
“A slowing US economy changes the demand outlook for oil. We may end up with a glut, not shortages, later this year,’’ he added.
The United States probably didn’t create enough jobs in July to cut unemployment, according to a Bloomberg News survey of economists before the Labor Department’s employment report on Friday.
“There’s been plenty of bad economic news,’’ said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’re going to be white-knuckling it until Friday when we will see if employment rose. That should be the next catalyst for a major move.’’
The dollar rose 0.4 percent to $1.42 against the euro, from $1.425 yesterday, after climbing to $1.4151, the highest level since July 21. A stronger US currency reduces the appeal of dollar-denominated raw materials as an investment.
Federal Reserve policy makers may start weighing more steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts.
During the first half of 2011, the Federal Reserve carried out a $600 billion program in asset purchases known as quantitative easing.
An Energy Department report today may show US crude oil inventories climbed 1.5 million barrels last week, according to the median of 14 analyst estimates in a Bloomberg News survey.
