Crude Oil Drops to 1-Month Low After Retail Sales Fall Short of Estimates
Crude oil fell to a one-month low after sales at U.S. retailers rose less than forecast in July, a sign that economic growth is slowing.
Oil dropped for a fourth day as a lack of jobs prompted Americans to hold back on spending, according to figures from the Commerce Department. U.S. gasoline inventories increased for a seventh week last week, the government said on Aug. 11.
“The economic picture is unsettled,” said Gene McGillian, an analyst and broker at Tradition Energy a procurement adviser in Stamford, Connecticut. “The fundamentals are weak, with high inventories and weak demand, so the market has a hard time holding above $80.”
Crude oil for September delivery fell 39 cents, or 0.5 percent, to $75.35 a barrel at 1:36 p.m. on the New York Mercantile Exchange. Earlier, it touched $75.05, the lowest price since July 13. Futures have fallen 6.6 percent this week, the most since the week ended July 2.
Retail sales increased 0.4 percent last month, following a revised 0.3 percent drop in June. Economists projected a 0.5 percent gain, according to the median estimate in a Bloomberg News survey.
“The retail sales numbers were a little disappointing, which moved the market lower,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York.
Week’s Drop
Oil plunged 7 percent in the previous three sessions on government reports that initial jobless claims rose by 2,000 to 484,000 last week, the highest level since February, and gasoline supplies climbed 409,000 barrels to 223.4 million, the highest level since April 30.
“We were getting a little inflated, and now we’re oversold,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “The speculators will lick their wounds over the weekend, and next week we’re going to get a dollar or two back.”
Oil supplies were 8.1 percent above the five-year average last week, according to the Energy Department.
Oil rigs operating in the U.S. jumped the most in nine months this week, according to data published by Baker Hughes Inc. Rigs exploring for and producing oil climbed by 25 to 636, the highest level since January 1991.
Equities swung between gains and losses a day after the Standard & Poor’s 500 Index slipped to its lowest level since July 21. The S&P 500 gained 0.83 point to 1,084.44, and the Dow Jones Industrial Average rose 23.69 points to 10,343.64.
Dollar Advances
The dollar strengthened to its highest level in more than three weeks, curbing the appeal of commodities as an alternate investment. The euro was at $1.278 in New York, compared with $1.2829 yesterday. Earlier, it touched $1.2753, the lowest level since July 22. The U.S. currency has increased 3.8 percent since Aug. 6 and is poised for the best week since May 7.
“The euro is under pressure again, and the Dow is lower, allowing the fundamentals to shine through,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut.
The Organization of Petroleum Exporting Countries increased its global oil-demand forecast for this year and next by 140,000 barrels a day each in its monthly report today, as emerging economies in Asia, the Middle East and Latin America push consumption higher.
OPEC Forecast
Worldwide crude oil use will climb by 1.05 million barrels a day, or 1.2 percent, next year to average 86.56 million a day, the organization’s Vienna-based secretariat said. Still, “oil demand growth will remain moderate” because of uncertainties about the pace of recovery, OPEC said.
Brent crude oil for September settlement fell 46 cents, or 0.6 percent, to $75.06 a barrel on the London-based ICE Futures Europe Exchange.
Oil will probably decline next week on speculation that slowing U.S. economic growth will increase fuel inventories, a Bloomberg News survey showed. Twenty of 36 analysts, or 56 percent, forecast crude will decline through Aug. 20. Ten respondents, or 28 percent, predicted that futures will be little changed and six projected an increase.
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