Crude oil fell the most in five weeks in New York after the Labor Department reported the productivity of workers in the U.S. fell in the second quarter, a sign that the economy is struggling to recover. Oil fell as much as 2.8 percent of the department said the world’s largest economy lost momentum heading into the second year of recovery. Crude compared losses after Federal Reserve officials announced their first attempt to enhance the growth since March 2009.
The productivity report is not good news, and if anything, suggests that the recession will be longer, not shorter, “said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
Crude oil for September delivery fell $ 1.24, or 1.5 percent, to $ 80.24 a barrel 2:30 p.m. closing of the floor at the New York Mercantile Exchange. Prices earlier touched $ 79.20, its lowest level since August 2. Oil has risen 14 percent in the past year.
The Labor Department’s measure of worker output per hour declined 0.9 percent at an annual rate, the first decline since the end of 2008. The median forecast of economists polled by Bloomberg News assume a 0.1 percent gain. Labour costs increased at a rate of 0.2 percent, less than estimated.
The Fed decided to reinvest principal payments on mortgage companies in the long-term Treasury securities to the slowing U.S. economy keep relapsing into a recession.
“The Fed decided to make a few things to help the economy,” said Peter Beutel, president of Cameron Hanover Inc. in New Canaan business consultant, Connecticut. “Of course, the market does not think it was enough, so we are still in negative territory.”
The U.S. is the world’s largest oil consumer and is the second largest energy user after China.
China oil import
China’s crude imports fell 15 percent to 18.8 million tons in July from a record 22.1 million in June, according to data today from the General Administration of Customs.
“This morning was focused on the fact that Chinese songs were terrible and productivity numbers were not good,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is a reminder that you can not put all your eggs in the basket and it is expected that China demand to drive every day.”
The Energy Department increased the crude oil price forecast for 2010 to an average $ 79.13 per barrel from $ 78.69 in July, according to its monthly Short-Term Energy Outlook, released today. The department raised its estimate for global oil consumption this year to 85.91 million barrels per day 85.82 million last month.
Shares Drop
U.S. stocks were little changed, with the Standard & Poor’s 500 index near a 12-week high. The S & P 500 index fell 0.63 points to 1127.16. The Dow Jones Industrial Average gained 0.75 point at 10,699.50.
A weather system in the southeastern Gulf of Mexico has a 70 percent chance of a tropical storm in the next 48 hours, according to a U.S. National Hurricane Center estimated time of fourteen Miami. Watches and warnings for the northern Gulf could be required as early as this afternoon, it said.
The low pressure system about 100 miles (161 kilometers) west of the southwest coast of Florida. BP Plc suspended drilling on the topography and the building in the Gulf permanently seal the site of the worst oil spill in U.S. history.
Approximately 31 percent of U.S. oil comes from the Gulf. The area is home to 43 percent of operable refining capacity and seven of the 10 busiest land ports.
U. S. Supplies
An Energy Department report tomorrow likely to show that crude oil stocks in the U.S. 2 million barrels last week fell from 358 million the previous week, according to the median forecast in a Bloomberg News survey of 17 analysts. Sixteen estimate supplies fell, and said that they experience.
Refineries ran at 90.7 percent is likely, 0.5 percentage point from the previous week, according to the survey.
Gasoline stockpiles probably increased for the seventh consecutive week rose 500,000 barrels to 223 million, according to the survey. That would be the highest level since the week ending April 30 to be.
Gasoline Demand
U.S. gasoline demand fell 1.6 percent to an average of 9.42 million barrels of fuel per day in the week ending August 6, the first decline in a month, MasterCard Inc. said today in its report Spending Pulse.
Brent September settlement fell $ 1.37, or 1.7 percent, to $ 79.62 per barrel on the London-based ICE Futures.
source:bloomberg
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