Crude Falls Below $77 After U.S. Supplies Increase, Economic Outlook Dims

Crude oil declined for a third day after U.S. jobless claims increased, bolstering concern that economic growth will slow and fuel demand will drop. Oil decreased as much as 2.5 percent as initial jobless claims rose by 2,000 to 484,000 last week, the highest level since February. Yesterday, a government report showed that U.S. gasoline supplies climbed for a seventh week and stockpiles of distillate fuel, a category that includes heating oil and diesel, advanced to the highest level since January 1983.

“The weekly jobless numbers were disastrous and sent the market lower,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The oil market is facing the reality, which is that supplies exceed demand. The only thing that was supporting prices was a false sense of economic security.” Crude oil for September delivery dropped $1.46, or 1.9 percent, to $76.56 a barrel at 10:03 a.m. on the New York Mercantile Exchange. Futures touched $76.05, the lowest level since July 28.

Brent crude oil for September settlement fell $1.52, or 2 percent, to $76.12 a barrel on the London based ICE Futures Europe Exchange. Economists forecast claims would fall to 465,000, according to the median of 42 projections in a Bloomberg News survey. The government revised the prior week’s claims figure up to 482,000 from a previously reported 479,000. The Federal Reserve on Aug. 10 held its benchmark interest rate at a record low and announced it will reinvest principal payments on mortgage holdings into long-term Treasury securities, an effort to bolster economic growth.....Read the entire article.

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Crude Oil Drops a Fourth Day Amid Concern Slow Recovery Will Hurt Demand

Crude oil declined for a fourth day in New York after confidence among U.S. consumers slumped, adding to concerns a recovery in fuel demand may falter in the biggest energy consuming nation. Oil dropped after the Thomson Reuters/University of Michigan preliminary consumer sentiment index for July fell to 66.5 from 76 in June, the lowest level since August. The gauge was projected to fall to 74, according to a survey of economists by Bloomberg News.

Crude oil for August delivery dropped as much as 51 cents, or 0.7 percent, to $75.50 on the New York Mercantile Exchange. It was at $75.74 at 8:27 a.m. Sydney time. The contract fell 61 cents to $76.01 on July 16. Futures have declined 8.2 percent since the start of the year. U.S. equities dropped on July 16 after the slump in consumer confidence and lower than estimated revenue at companies from Bank of America Corp. to General Electric Co. The Dow Jones Industrial Average declined 2.5 percent and the Standard & Poor’s 500 Index slipped 2.9 percent.

The Federal Reserve Bank of New York reported last week that its general economic index fell to 5.1 in July from 19.6 the prior month. The Federal Reserve Bank of Philadelphia’s general economic index declined to 5.1 this month, the lowest level since August 2009, from 8 in June. Brent crude oil for September settlement fell 72 cents, or 0.9 percent on July 16, to end the session at $75.37 on the London-based ICE Futures Europe exchange.

Reporter Mark Shenk can be reached at mshenk1@bloomberg.net Ben Sharples at bsharples@bloomberg.net


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Phil Flynn: Go Ahead and Make my Day

Go ahead and make my day. Commodity prices explode in what really shouldn’t be called trading, it should be called tainting. One day after paying all “due respect” to the Federal Reserve the dollar tanked and the commodities rallied almost trash talking the Federal Reserve and daring them to do something about it. I know what you’re thinking, did the Fed cut rates 4 times or was it five? In fact in all the excitement I kind of forgot myself.

I guess the question is: does the Fed feel lucky? Well do ya punk? The commodity markets are confident that the Fed is powerless at this point and does not have the courage to challenge the dollar. Everyone knows that the Fed can’t raise rates and the Fed will keep the target range for the federal funds rate at 0 to 1/4. The fact is the market does not believe the Fed has the courage to even hint at an exit strategy. Go ahead, keep printing money.....Read the entire article

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