Oil Trades Little Changed on Outlook for Slow Economic Recovery

June 29 (Bloomberg) -- Crude oil was little changed after falling on speculation demand for energy and fuel may be limited as the global economy makes a slow recovery from the worst recession since World War II.

A report today in the U.S., the world’s largest oil consumer, may show manufacturing in Texas marked two years of contraction this month. Storms over Mexico’s Yucatan Peninsula may strengthen as they drift northwest, the U.S. National Hurricane Center said. The chance of a cyclone developing in the oil-rich gulf is less than 30 percent, the center said.

“We’ve still got some pretty mixed signals in terms of oil’s fundamentals and in terms of the global economic situation,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. “It’s probably going to take some fairly major catalyst to get it out of this range.”

Crude oil for August delivery was at $69.11 a barrel, down seven cents, in after-hours electronic trading on the New York Mercantile Exchange at 7:15 a.m. in Singapore.

The contract fell $1.07, or 1.5 percent, to $69.16 on June 26 after a report showed savings in the U.S. jumped to a 15-year high in May, signaling a slow recovery in household spending. The August contract declined 1.2 percent last week, having reached a seven-month high of $73.90 on June 11.

New York oil futures have gained 55 percent this year, as rising world equity markets and a weaker dollar encouraged investors to buy the commodity as a hedge against inflation and to profit when demand recovered.

Directionless Dollar

The Standard & Poor’s 500 Index fell the past two weeks. The dollar has also been “fairly directionless,” Commodity Warrant’s Hassall said.

“That is really calling into question whether some of these commodities have rallied too fast, too hard,” he said.

Brent crude oil for August settlement fell 5 cents to $68.87 a barrel on London’s ICE Futures Europe exchange today. It fell 1.2 percent on June 26.

While oil prices are “pretty reasonable” another increase in U.S. gasoline stockpiles this week may be enough to prevent any push higher, he said.

U.S. gasoline demand, based on deliveries from refineries and terminals, usually peaks July-August.

Stockpiles rose the past two weeks, gaining 3.87 million barrels to 208.9 million in the week ended June 19, according to Energy Department data. Total fuel consumption fell 5.5 percent to 17.9 million barrels a day the same period, the biggest drop since January.

This week’s gasoline inventory report “could be a pretty critical number,” Hassall said.