Oil fell in New York, heading for a third weekly decline, as concerns that market volatility will derail the economic recovery countered an unexpected drop in jobless claims in the world’s biggest crude-consuming nation. Futures slipped as much as 0.7 percent today, the first decrease in three days. Prices rose yesterday after the number of applications for U.S. unemployment payments slid to a four- month low. Other reports showed consumer confidence fell last week and the trade gap widened in June to the highest since October 2008. Crude has dropped as low as $75.71 a barrel and climbed as high as $85.97 this week. “The biggest downside risk is that all this volatility cripples confidence,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicts oil in New York will average $98 a barrel in the third quarter. “There are continued concerns around Europe and sovereign debt and when you overlay that on weaker than expected macro data it can cause people to fear for the worst.” Crude for September delivery fell as much as 62 cents to $85.10 a barrel in electronic trading on the New York Mercantile Exchange, and was at $85.20 at 12:04 p.m. Sydney time. The contract yesterday gained 3.4 percent to $85.72. Prices are down 2 percent this week and 12 percent higher the past year. Brent oil for September settlement declined 48 cents, or 0.4 percent, to $107.54 a barrel on the ICE Futures Europe exchange in London. The European benchmark contract was at a premium of $22.42 to U.S. futures, compared with a record close of $23.79 on Aug. 10. Economic Governance French President Nicolas Sarkozy and German Chancellor Angela Merkel plan to meet next week after concern that the euro-area debt crisis will spread rattled French markets. The leaders of Europe’s two biggest economies will discuss economic governance of the 17-nation euro region in Paris on Aug. 16, according to separate statements issued yesterday. The euro extended a weekly drop against the dollar today before a report forecast to show an expansion in industrial production in the region stalled in June. A stronger U.S. currency curbs investor demand for raw materials The MSCI Asia Pacific gained 0.8 percent to 123.04 today, trimming its loss for the week to 2.4 percent. Asian stocks are recovering after falling as much as 13 percent since Aug. 1 amid concern about Europe’s debt crisis and a political battle over the U.S. debt ceiling. Regulators in France, Spain, Italy and Belgium will impose bans on short-selling from today to stabilize markets after European banks plunged. Trade Deficit The U.S. trade deficit unexpectedly rose 4.4 percent in June to $53.1 billion from $50.8 billion in the prior month, Commerce Department figures showed. The widening was paced by a 2.3 percent slump in exports, the biggest decline since January 2009, as overseas demand for everything from soybeans and plastics to industrial engines and generators decreased. Consumer confidence dropped last week to the lowest level since mid-May as high earners, homeowners and those working full time turned more pessimistic, the Bloomberg Consumer Comfort Index showed yesterday. The Standard & Poor’s 500 Index jumped 4.6 percent to 1,172.64 at the 4 p.m. close in New York yesterday after claims for U.S. unemployment benefits dropped. Applications for jobless benefits decreased 7,000 to 395,000 last week, the fewest since early April, according to the Labor Department. The median forecast of 48 economists surveyed by Bloomberg News projected claims would increase to 405,000. The Organization of Petroleum Exporting Countries will trim shipments by 0.3 percent this month as refiners reduce imports during plant maintenance, according to a report yesterday from tanker-tracker Oil Movements. Exports will drop to 22.71 million barrels a day in the four weeks to Aug. 27, the Halifax, England-based researcher said. That compares with 22.77 million barrels in the month to July 30. To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net To contact the editor responsible for this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.net

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