Tuesday, June 29, 2010

Crude Falls as Chinese Growth Is Seen Slowing, Storm Avoids Gulf Platforms

Crude oil fell the most in more than three weeks amid concern that China’s economy is growing at a slower pace than estimated and forecasts that a tropical storm in the Gulf of Mexico will miss oil producing areas. Oil lost as much as 3.4 percent after the Conference Board corrected its April gauge for the outlook on China’s economy, saying it rose by the smallest amount since November. Tropical Storm Alex make landfall in Mexico July 1 as a hurricane, according to the U.S. National Hurricane Center in Miami.

“It’s been our thesis that China was going to slow and oil was overpriced as a result,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut based procurement adviser. “In the current forecast, it appears the storm is a non event in terms of damage to the Gulf of Mexico.”

Oil for August delivery fell $2.47, or 3.2 percent, to $75.78 a barrel at 9:07 a.m. on the New York Mercantile Exchange. Earlier, crude touched $75.63 a barrel in the biggest one day drop since June 4. It has dropped 4.5 percent this year and 9.5 percent this quarter. Oil also declined as equity markets dropped and the dollar strengthened against the euro, curbing the appeal of commodities as an alternative investment.

Reporter Margot Habiby can be reached at mhabiby@bloomberg.net.


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