Bloomberg News

Oil Falls as Isaac Reaches Land; U.S. Stocks Fluctuate

August 29, 2012

Stocks Drop as Metals Decline Before U.S. GDP Data; Oil Retreats

Copper slid 0.7 percent. Photographer: Oliver Bunic/Bloomberg

Oil slid as U.S. supplies grew and Hurricane Isaac’s landfall reduced threats to offshore energy facilities. Treasuries fell and stocks fluctuated as American economic growth was revised higher and investors awaited Federal Reserve Chairman Ben S. Bernanke’s speech in two days.

Crude oil for October delivery lost 1.2 percent to $95.16 a barrel as of 11:15 a.m. in New York, natural gas traded near the lowest price in almost 10 weeks and gasoline fell 0.6 percent. Ten-year note yields climbed three basis points to 1.66 percent after dropping to a three-week low yesterday, while the Standard & Poor’s 500 Index swung between gains and losses near 1,409.

Energy Department data showed crude supplies increased by 3.78 million barrels, defying forecasts for a drop. Isaac is forecast to linger over Louisiana for two days after halting 93 percent of U.S. oil production in the Gulf of Mexico. The U.S. economy grew at a 1.7 percent annual rate from April through June, up from an initial estimate of 1.5 percent, government data showed before Bernanke’s Aug. 31 speech in Wyoming.

“My advice is not to think that the Fed has silver bullets, there is a limit to what you can accomplish on the monetary side,” James Kee, president at South Texas Money Management in San Antonio, Texas, said in a phone interview. His firm oversees about $1.8 billion. “The market has already been pricing in low growth and basically all these points on the margin do co-operate with some other data that there is no imminent recession signal.”

‘Successful Drill’

Crude sank as much as 1.5 percent to $94.89 a barrel, while natural gas dropped 1.5 percent to $2.575 per million British thermal units before erasing declines and trading little changed.

U.S. crude supplies increased by 3.78 million barrels to 364.5 million barrels, while analysts had forecast a median drop of 1.75 million barrels.

“The crude oil number was a surprise relative to expectations,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Isaac continues to cause damage along the Gulf but as far as the oil and gas industries are concerned it appears to have been a successful drill rather than a traumatic event.”

Among U.S. stocks, WellPoint Inc. increased 7.3 percent after Angela Braly resigned as chairman and chief executive officer of the insurer. Joy Global Inc., the maker of P&H and Joy mining equipment, slumped 4.7 percent after cutting forecasts for earnings and revenue. Rival Caterpillar Inc., the world’s largest maker of construction and mining machines, slid 1.5 percent.

European Shares

In Europe, L’Oreal SA dropped 4.5 percent after the world’s largest cosmetics maker reported profit margins that missed analysts’ estimates.

Bouygues SA tumbled 8.9 percent after the French building, television and telecommunications company trimmed the earnings forecast for its phone business. Banca Monte dei Paschi di Siena SpA sank 7.5 percent after posting a loss.

Tin declined 4.8 percent, the most in a month, in London after PT Timah, the world’s third largest producer, restarted sales. Copper slipped for a third consecutive day in London.

The MSCI Emerging Markets Index (MXEF) of stocks in developing nations lost 0.4 percent. The Shanghai Composite Index (SHCOMP) retreated 1 percent on a report China may slow the pace of monetary policy easing. Russia’s Micex Index lost 1 percent and India’s Sensex declined 0.8 percent. South Korea’s Kospi index jumped 0.6 percent.

To contact the reporters on this story: Mark Shenk in New York at; Lu Wang in New York at

To contact the editor responsible for this story: Lynn Thomasson at

Toyota's Hydrogen Man
blog comments powered by Disqus