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Crude Oil Futures: Crude Oil Heads for First Monthly Slide Since May on Slowing Global Growth
 August 31st, 2010
Crude oil futures fell, headed for its first monthly decline since May, before a report forecast to show U.S. crude inventories increased to the most in a month.
Crude oil futures dropped as much as 1.7 percent, extending their decline from the highest level in a week reached on Aug. 27, after the Commerce Department said incomes rose 0.2 percent, less than the 0.3 percent estimate by economists surveyed by Bloomberg News. An Energy Department report tomorrow may show crude stockpiles gained 1.55 million barrels last week.
“This week’s macro releases are likely to confirm a trend of slowing growth in the U.S., and that’s once again dragging sentiment down in the oil market,” said Andrey Kryuchenkov, an analyst with VTB Capital in London.
Crude oil futures for October delivery declined as much as $1.29 to $73.41 a barrel in electronic trading on the New York Mercantile Exchange, and was at $73.75 at 1:34 p.m. London time. Brent crude for October settlement dropped 58 cents, or 0.8 percent, to $76.02 a barrel on the ICE Futures Europe Exchange in London.
Crude oil futures have tumbled 6.7 percent in New York this month and are down 7.3 percent since the start of the year. Oil rose 2.3 percent last week, the biggest increase since the period ended July 23.
“The past couple of weeks have been clouded by talk of a double-dip recession,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Until we get some macro-news that is more consistent, these markets are going to be a bit choppy.”
Crude Oil SuppliesCrude oil stockpiles probably climbed for a second week, according to the median of 12 analysts surveyed by Bloomberg News. The Energy Department is scheduled to release its weekly supply report tomorrow in Washington.
Inventories of gasoline probably declined 375,000 barrels last week, according to the survey. Supplies of distillate fuel, which include heating oil and diesel, may have climbed 1 million barrels, the survey said.
The Organization of Petroleum Exporting Countries’ oil output fell to a seven-month low in August, another Bloomberg News survey showed. Iraq led the drop because of a pipeline hobbled by a bombing.
Production slipped 75,000 barrels, or 0.3 percent, to average 29.15 million barrels a day. Output by members with quotas, all except Iraq, declined 5,000 barrels to 26.805 million, 1.96 million above their target.
Crude Oil Futures Below $70Crude oil futures prices will be supported at $70 a barrel for another year as the cost of oil production in deeper waters rises and fears of a global double-dip recession ease, a senior analyst with Norway’s DnB Nor ASA said.
Crude oil has made three unsuccessful attempts to break below $70 a barrel this year, Torbjoern Kjus, senior oil market analyst at the Oslo-based bank, said in an interview in Singapore yesterday. Banks, shipping-fuel companies and airlines are finding $70 a barrel “a good entry point” into the crude market, supporting prices with hedging requirements, he said.
Crude oil may only start to show clearer trends to higher prices in three months or more, Gordon Manning, a Sydney-based technical analyst at National Australia Bank Ltd., said in an interview today. Prices have stayed above the key support level of $69.85 a barrel since May, and will stay bullish until the level is breached, he said.
- Grant Smith in London at Bloomberg.
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