Oil Steady After Tumbling on World Bank’s Recession Prediction

June 23 (Bloomberg) -- Crude oil was little changed near $67 after falling on the World Bank’s prediction that the global recession will be deeper than forecast, bolstering concern that fuel consumption will remain depressed.

Oil dropped more than $2 a barrel yesterday after the bank projected the world economy will contract 2.9 percent this year, more than its previously forecast decrease of 1.7 percent. Prices also declined as the dollar strengthened, reducing the appeal of commodities as an alternative investment.

“With the global economy looking to shrink more than previously thought, the world will also use less oil than previously thought,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “With lower oil consumption, the price of oil should come down since supply levels look to remain at current levels.”

Crude oil for August delivery was at $67.40 a barrel, down 10 cents, on the New York Mercantile Exchange at 9:03 a.m. in Sydney. Yesterday, the contract fell 3.6 percent to settle at $67.50 a barrel. The July contract expired yesterday.

U.S. and European stocks fell on the World Bank forecast, sending the Standard & Poor’s 500 Index down the most in two months. The S&P 500 slid 3.1 percent in New York following last week’s 2.6 percent drop.

Gasoline for July delivery declined 6.47 cents, or 3.4 percent, to end the session at $1.8597 a gallon in New York. It was the lowest settlement since May 26.

Iranian Unrest

Unrest continued in Tehran over the results of elections in Iran, the Organization of Petroleum Exporting Countries’ second- largest producer. Iran’s Revolutionary Guards said security forces will crush further protests.

“The recent developments in the country have had no impact on the oil industry or crude exports,” state-run Press TV cited Iran’s OPEC governor, Mohammad Ali Khatibi, as telling the Iran Daily newspaper June 21. “The national oil industry is 100 percent normal.”

Oil prices are “satisfactory” for producers and consumers even as global stockpiles remain high, Organization of Petroleum Exporting Countries President Jose Maria Botelho de Vasconcelos said yesterday in Luanda, the Angolan capital.

Total U.S. daily fuel demand in the four weeks ended June 12 was down 6 percent from a year earlier, the Energy Department said last week. Gasoline inventories rose 3.39 million barrels to 205 million in the week ended June 12, the biggest increase since January, the department said.

Gasoline Supplies

Gasoline supplies rose 1 million barrels last week, according to the median of 10 estimates by analysts surveyed by Bloomberg News. The Energy Department is scheduled to release its weekly report on June 24 at 10:30 a.m. in Washington.

The dollar advanced after the World Bank report encouraged investors to look for safe assets. The dollar was at $1.3856 per euro at 6:06 a.m. in Tokyo, following a 0.5 percent gain.

Declining energy prices sent the Reuters/Jefferies CRB Index of 19 raw materials lower. The index dropped 2.7 percent to 246.07, the lowest level since May 26.

Brent crude oil for August settlement dropped $2.21, or 3.2 percent, to end the session at $66.98 a barrel on London’s ICE Futures Europe exchange.