New York: Crude oil fell to a five-week low and petrol declined on concern that the global economic recovery will falter, curbing fuel consumption.
Oil dropped for a fourth day, the longest losing streak since February, as US, European and Asian stock markets declined. The dollar advanced against the euro, curbing the appeal of commodities to investors looking for an inflation hedge. Oil in New York was down 12% from an eight-month high of $73.38 (Rs3,536.92) touched on 30 June.
“It’s hard to see evidence of an economic recovery in the near term, so energy prices are moving lower from their lofty levels,” said John Kilduff, senior vice-president of energy at MF Global in New York.
trCrude oil for August delivery fell $2.47, or 3.7%, to $64.26 a barrel on the New York Mercantile Exchange. Futures touched $63.40, the lowest since 28 May. Prices are up 44% this year.
Reduced appeal: Traders at the New York Mercantile Exchange. Oil in New York was down 12% from an eight-month high of $73.38. Seth Wenig / AP
Electronic trades from 3 July are being counted as part of today’s session because of the US Independence Day holiday on 4 July.
Petrol for August delivery declined 4.41 cents, or 2.5%, to $1.7467 a gallon in New York. Futures touched $1.7195, the lowest since 18 May.
“The market overreacted to the upside when we saw the first evidence that we were seeing the green shoots of an economic recovery,” said Bill O’Grady, chief markets strategist at St Louis-based Confluence Investment Management Llc., an investment advisory and management firm. “Now the market is overreacting on bearish data.”
US petrol stockpiles climbed 2.33 million barrels to 211.2 million last week, an energy department report on 1 July showed. Inventories of distillate fuel, a category that includes diesel and heating oil, climbed 2.9 million barrels to 155 million, the highest since 1987.
“It’s hard to be bullish about oil when gasoline (petrol) supplies are rising during the height of the driving season and distillate supplies are near a record high,” Kilduff said.
Petrol demand in the US peaks during the summer, when Americans take to the highways for vacations. The so-called driving season lasts from the Memorial Day weekend in late May to Labor Day in early September.