Oil Falls a Sixth Day as Equities Drop, Gasoline Supply Gains

2:17 PM / Posted by E-pr0 /

July 8 (Bloomberg) -- Crude oil fell, poised for the longest losing streak since December, as equities slumped and an industry report showed an increase in U.S. fuel inventories.

Oil declined for a sixth day after the American Petroleum Institute said gasoline supplies rose 767,000 barrels to 212.4 million last week. European and U.S. stock futures retreated and Asian shares tumbled on concern that second-quarter earnings reports will show the first global recession since World War II is far from over.

“The drop in equities is showing that people were over- optimistic on the economy,” said Clarence Chu, a trader with options dealers Hudson Energy Capital in Singapore. “Usually for this time of year we should be getting a draw in gasoline so if it’s building that’s a bad sign.”

Crude oil for August delivery fell as much as $1.06, or 1.7 percent, to $61.87 a barrel on the New York Mercantile Exchange, the lowest intraday price since May 26. Oil was at $62.19 a barrel at 2:51 p.m. Singapore time.

Oil in New York has declined 15 percent from an eight-month intraday high of $73.38 reached June 30 as higher U.S. unemployment raised concern that the economy of the world’s biggest energy-consuming country will be slow to recover.

“Given the data from the U.S., the market has become cautious on the outlook for an economic recovery and that’s tempered the oil price,” David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd., said in an interview with Bloomberg Television.

Stocks Decline

The MSCI Asia-Pacific Index dropped 1.5 percent, falling for a sixth day. Futures on the Dow Jones Euro Stoxx 50 Index slipped 0.6 percent to 2,297 at 7:10 a.m. in London. The U.K.’s FTSE 100 Index may open 21 points lower, according to CMC Markets.

“A negative earnings outlook for the second quarter swept over the equities markets, helping to push oil lower,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “The market is experiencing a push to go lower with a combination of over supply and negative economic sentiment.”

Machinery orders in Japan, the world’s third-largest oil consumer, fell unexpectedly for a third month in May, dropping 3 percent from April, the Cabinet Office said today. The decline is adding to signs that the recession isn’t moderating for the second-largest economy.

Crude oil inventories dropped 1.4 million barrels to 348.3 million, according to the API report. Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 3.42 million barrels to 158 million, the highest since 1985.

Gasoline Supplies

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Gasoline inventories probably rose 900,000 barrels last week, according to a Bloomberg News survey conducted before today’s Energy Department report. The department is scheduled to release its weekly report at 10:30 a.m. in Washington.

“If it is the middle of July and the U.S. consumer has excess supply of gasoline, then expect prices to start heading lower,” Sander said.

Gasoline for August delivery declined as much as 2.78 cents, or 1.6 percent, to $1.7050 a gallon. Yesterday, it fell 0.76 cent, or 0.4 percent, to end the session at $1.7328.

Oil also fell as the dollar advanced against the euro, reducing the appeal of commodities as an inflation hedge. The euro traded at $1.3892 to the U.S. currency at 2:50 p.m. Singapore time from $1.3924 yesterday and $1.4142 on July 1.

Brent crude for August settlement declined as much as 93 cents, or 1.5 percent, to $62.30 a barrel on London’s ICE Futures Europe exchange. It was at $62.57 a barrel at 2:50 p.m. Singapore time. Yesterday, the contract fell 1.3 percent to $63.23, the lowest settlement price since May 27.

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