Oil declined for a second day in New York as investors speculated that signs the U.S. and Chinese economies are weakening indicate fuel demand will falter in the world’s biggest crude-consuming nations.
Futures slipped as much as 0.9 percent, extending a 2.8 percent slide on Sept. 2. Chinese services slowed in August while U.S. employment stagnated, reports showed last week. Crude also fell as Exxon Mobil Corp. and Royal Dutch Shell Plc returned workers to some oil and natural gas platforms after Tropical Storm Lee moved out of the Gulf of Mexico. London-traded Brent narrowed its premium to U.S. prices.
“The sentiment is negative as a result of the employment data and people are starting to think the economy is kaput,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “Equity prices are under pressure, crude is under pressure. Confidence will have to be rebuilt.”
Crude for October delivery fell as much as 77 cents to $85.68 a barrel in electronic trading on the New York Mercantile Exchange, and was at $85.84 at 11:23 a.m. Sydney time. The contract dropped $2.48, or 2.8 percent, to $86.45 on Sept. 2. Prices are up 16 percent the past year. There will be no Nymex floor trading today because of the Labor Day holiday.
Brent oil for October settlement decreased 76 cents, or 0.7 percent, to $111.57 on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $25.78 to U.S. futures, compared with a record close of $26.21 on Aug. 19.
Employment, Services
U.S. payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was smaller than initially estimated, the Labor Department said in Washington. The median forecast in a Bloomberg News survey called for a gain of 68,000.
“Oil futures fell on the weaker U.S. data,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, said in a note today. The bank estimates New York oil will average $100 a barrel in the third quarter. “The potential for some resurrection in the U.S. labor market now increasingly looks reliant on further policy stimulus.”
China’s purchasing managers’ index of non-manufacturing industries dipped to 57.6 from 59.6 in July, the China Federation of Logistics and Purchasing said on its website. A reading above 50 indicates expansion.
Oil Bets
Hedge funds boosted bullish bets on oil by the most since March as Hurricane Irene took aim at the U.S. East Coast, threatening imports, pipelines and refineries. The funds and other large speculators increased wagers that prices will rise by 13 percent in the week ended Aug. 30 to the highest level since July 26, according to the Commodity Futures Trading Commission’s Sept. 2 Commitments of Traders report.
Lee picked up speed and began a move toward the waterlogged U.S. Northeast after making landfall and soaking Louisiana yesterday. The storm was about 30 miles (50 kilometers) north- northeast of Lafayette, Louisiana, moving north at 5 miles per hour as of 4 p.m. local time, the U.S. National Hurricane Center said in its latest advisory.
Crews are resuming production in the western Gulf after inspecting equipment for damage, David Eglinton, a spokesman for Exxon Mobil, based in Irving, Texas, said yesterday in an e- mail. Shell confirmed it began returning staff after evacuating as many as 858 workers.
Tropical-storm force winds remain in the Gulf of Mexico, where 60 percent of oil production and 44 percent of natural gas output is halted, the Bureau of Ocean Energy Management, Regulation and Enforcement said on its website yesterday.
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
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