Oil Little Changed Near $72 as Dollar Rises, U.S. Equities Fall

Aug. 7 (Bloomberg) -- Crude oil was little changed near $72 a barrel after U.S. equities dropped and the dollar strengthened, reducing the appeal of commodities as an alternative investment.

U.S. stocks declined after a JPMorgan Chase & Co. downgrade sent health-care companies lower and concern grew that the market’s recent rally outpaced the economy’s prospects. U.S. crude-oil stockpiles climbed 1.67 million barrels to 349.5 million last week, an Aug. 5 Energy Department report showed.

“Fundamentals are still pretty week and we haven’t really seen any real trend improvement recently,” Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne said by phone today. “All of the strength seems to be based on sentiment.”

Crude oil for September delivery traded at $71.89 a barrel, down five cents on the New York Mercantile Exchange at 9:48 a.m. Sydney time. Yesterday, the contract fell 3 cents to settle at $71.94. Prices are up 3.31 percent this week, headed for a fourth week of gains.

The Standard & Poor’s 500 Index dropped 0.8 percent to 994.63 in New York and the Dow Jones Industrial Average fell 57.66 points, or 0.6 percent, to 9,223.31.

The dollar gained versus the euro yesterday on speculation traders canceled bets against the dollar before a U.S. Labor Department payroll report today. The report is projected to show the jobless rate rose to 9.6 percent in July from 9.5 percent in June, according to a Bloomberg News survey of economists. The U.S. currency traded at $1.4370 per euro at 10:01 a.m. Sydney time, from $1.4345 yesterday.

U.S. Consumption

“Unemployment is pretty important for U.S. consumption,” Westmore said. “Everyone is still a little worried about the U.S. consumer because when you look at the most recent GDP numbers it doesn’t look like the consumer has come back yet.”

The Organization of Petroleum Exporting Countries will increase crude shipments for the first time since June, according to consultant Oil Movements. OPEC will raise deliveries by 0.4 percent in the four weeks ending Aug. 22, the tanker tracker said yesterday, as higher prices encourage members to exceed production quotas.

Brent crude oil for September settlement fell 68 cents, or 0.9 percent, to $74.83 a barrel on London’s ICE Futures Europe Exchange yesterday.