Bloomberg News

Oil Drops First Day in Six on U.S., Europe Fuel Demand Outlook

October 12, 2011

Oct. 12 (Bloomberg) -- Oil fell in New York, snapping the longest run of gains this year, on speculation fuel demand will slow as the U.S. and Europe struggle to shore up their faltering economies.

Prices slid as much as 1.5 percent before a report that may show U.S. crude stockpiles increased last week. Futures also dropped after Slovak lawmakers voted against an overhaul of Europe’s bailout fund and the U.S. Senate blocked President Barack Obama’s $447 billion jobs plan. Brent’s premium to New York oil was at the widest in almost a month.

“The market is starting to come to grips with the depth of the issues in Europe,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. Investors are “questioning the ongoing demand for crude oil,” he said.

Crude for November delivery was at $85.56 a barrel, down 25 cents, in electronic trading on the New York Mercantile Exchange at 6:11 p.m. Sydney time. The contract climbed 0.5 percent yesterday to $85.81, the highest close since Sept. 21. Prices are down 6.4 percent this year.

Brent oil for November settlement rose 12 cents to $110.85 on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $25.29 to U.S. crude, the most since Sept. 15 and down from a record of $26.87 on Sept. 6.

U.S. crude-oil stockpiles probably rose by 800,000 barrels last week, according to the median of 15 analyst estimates in a Bloomberg News survey before a weekly Energy Department report. The department is releasing the data a day later than usual because of this week’s Columbus Day holiday.

U.S. Jobs, Euro

Opponents of Obama’s jobs plan had enough votes to block the measure in the Senate, with Democratic Senators Jon Tester of Montana and Ben Nelson of Nebraska opposing the plan. It includes cuts in payroll taxes for workers and employers and provides new funding for roads, bridges and other infrastructure.

In the 17-nation region using the euro, Slovakia is the only country that hasn’t ratified the enhancement of the European Financial Stability Facility. Lawmakers need to vote again “as soon as possible,” according to Prime Minister Iveta Radicova.

--Editors: Paul Gordon, Alexander Kwiatkowski

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 at akwiatkowsk2@bloomberg.net


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