By Ben Sharples - Jun 19, 2011
Oil declined for a second day in New York on speculation a weakening global economy and Greece’s debt crisis will lead to lower fuel demand.
Futures fell as much as 1 percent today after the biggest weekly decline in six weeks. European governments failed to agree on releasing a loan payout to spare Greece from default while Japan’s exports fell more than economists forecast in May. A report tomorrow may show U.S. home sales last month slid to the lowest this year.
“The major influence continues to be the European situation,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted oil will average $113 a barrel in the third quarter. “There is this tone of a global slowing in the economy. The data continues to be a bit soft out of the U.S.”
Crude for July delivery fell as much as 90 cents to $92.11 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.14 at 1:31 p.m. Sydney time. The contract expires tomorrow. The August future dropped 92 cents, or 1 percent, to $92.48.
Oil slipped $1.94, or 2 percent, to $93.01 on June 17, the lowest settlement since Feb. 18. Prices slid 6.3 percent last week, the biggest decline since the week ended May 6. Crude is 18 percent higher the past year.
Brent oil for August delivery dropped 94 cents, or 0.8 percent, to $112.27 a barrel on the London-based ICE Futures Europe exchange today. Prices are up 42 percent the past year.
Greek Debt
Euro-area finance ministers pushed Greece to pass laws to cut its deficit and sell state assets. They left open whether the country will get the full 12 billion euros ($17.1 billion) promised for July as part of a bailout package agreed last year, according to Luxembourg Prime Minister Jean-Claude Juncker, after chairing a crisis meeting in his country. Decisions on the next payout and a three-year follow-up package were put off until early next month.
Japan’s exports decreased 10.3 percent from a year earlier after April’s 12.4 percent drop, the Finance Ministry said today. The median estimate of 25 economists surveyed by Bloomberg News was for an 8.4 percent decline. The nation posted a trade deficit of 853.7 billion yen ($10.7 billion) in May.
The National Association of Realtors may say in a report tomorrow that sales of existing homes in the U.S. fell 5 percent to a 4.8 million annual pace, according to the median forecast of 55 economists surveyed by Bloomberg. That would be the weakest since November.
Growth Forecast
The International Monetary Fund cut its forecast for U.S. growth in 2011, warning of further setbacks to the economic recovery, along with potential contagion from the European debt crisis. The economy will grow 2.5 percent this year and 2.7 percent in 2012, down from the 2.8 percent and 2.9 percent projected in April, the IMF said June 17.
The Washington-based fund sees the world economy expanding 4.3 percent this year, down from 4.4 percent in April.
Oil may decrease this week on signals that economic growth in the U.S. and China will slow, curbing fuel use in the world’s biggest crude-consuming countries, a Bloomberg News survey showed. Eighteen of 38 analysts, or 47 percent, forecast prices will decline through June 24.
Thirteen respondents, or 34 percent, predicted prices will increase and seven estimated there will be little change. Last week, 54 percent of respondents said futures would drop.
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 in Singapore at akwiatkowsk2@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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