Crude Oil Drops for Sixth Day on Concern Over Slowing Chinese Recovery

Crude oil dropped for a sixth day in New York on concern that the pace of economic recovery is slowing in Europe and China, stalling a rebound in fuel demand. Oil fell below $72 a barrel as the China Automotive Technology & Research Center said car sales expanded at a slower pace in June. European stocks declined for a fifth day, the longest losing streak in a year, as a report showed growth slid in the region’s services and manufacturing industries.

“Crude has come under a bit of pressure because of worries about the global economy,” said Peter McGuire, managing director of CWA Global Markets Pty in Sydney. “Sentiment is negative. Looking at mature markets, it’s pretty bleak. Europe is looking terrible.” Crude oil for August delivery dropped as much as $1.05, or 1.5 percent, to $71.09 a barrel in electronic trading on the New York Mercantile Exchange, and was at $71.63 at 11:48 a.m. Singapore time. Floor trading was closed yesterday on the Nymex for the U.S. Independence Day holiday and electronic trades are booked into today’s for settlement purposes.

The market is in its longest pullback since a six day drop through May 18. Crude oil has declined 10 percent this year. Prices also fell as a Chinese services industry index slid to a 15 month low, adding to signs that the economy leading the world recovery is cooling. The measure fell to 55.6 from 56.4, HSBC Holdings Plc and Markit Economics said yesterday.
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Oil Rises to a 15 Month High on Signs Recovery May Be Sustained

Crude oil rose to a 15 month high on speculation fuel demand will increase as energy and economic data indicate the global recovery may be sustained amid freezing temperatures in the Northern Hemisphere. Oil advanced a second day after crude imports by China, the second largest energy consumer, climbed in December to reach a record annual total of 203.8 million metric tons, a customs report showed yesterday. U.S. consumers probably took advantage of holiday discounts in December while manufacturers churned out more goods, economists said before reports out this week.

“Asia has obviously performed well throughout this recession,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. “Beyond the short term, the global economy, and the U.S. in particular, the largest consumer of oil, is in the early stages of a recovery, which suggests that demand is on the mend.” Crude oil for February delivery rose as much as 92 cents, or 1.1 percent, to $83.67 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest since Oct. 14, 2008. It was at $83.46 a barrel at 12:50 p.m. Singapore time.

The contract gained 9 cents to $82.75 a barrel Jan. 8 after the dollar declined on a report showing employment in the U.S. unexpectedly fell in December. Futures have risen in 11 of the past 12 sessions as freezing temperatures in the U.S., Europe and Asia boosted heating fuel demand. More cold weather is forecast for China in the next two days.....Read the entire article.

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