Crude Oil Declines a Second Day on Economic Recovery Concern

Oct. 5 (Bloomberg) -- Crude oil declined for a second day in New York on concern about the pace of recovery in the U.S., the world’s biggest energy-consuming nation.

Oil fell as economist Nouriel Roubini, the New York University professor who predicted the financial crisis, said Oct. 3 that stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors. Australian shares and Japanese stock futures dropped today after reports last week showed the U.S. lost more jobs than estimated and factory orders declined.

“Oil seems to have been caught in a trap,” Mark Pervan, senior commodity strategist at ANZ Banking Group Ltd. in Melbourne, said by phone today. “It has been wanting to see a correction but a weakening U.S. dollar and firmer equity markets have made that difficult.”

Crude oil for November delivery fell 22 cents, or 0.3 percent, to $69.71 a barrel in electronic trading on the New York Mercantile Exchange at 11:24 a.m. Sydney time. Prices have gained 56 percent this year.

Oil prices dropped as much as 3.5 percent on Oct. 2 after a report showed the U.S. jobless rate increased to a 26-year high in September. The contract fell 87 cents, or 1.2 percent, to settle at $69.95 a barrel. The U.S. unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said Oct. 2 in Washington.

Stocks Decline

Australia’s benchmark S&P/ASX 200 Index fell as much as 0.2 percent in Sydney today. It was 6.9 points lower at 11:01 a.m. Sydney time. Japan’s Nikkei 225 Stock Average dipped 0.2 percent to 9,717 points at 9:12 a.m. local time.

“The equity markets are starting to realize that things may have run too hard, too quickly,” Pervan said.

The dollar fell to $1.4599 per euro at 11:02 a.m. Sydney time, from $1.4576 on Oct. 2. A weaker dollar increases the appeal of commodities as an alternative investment.

Brent crude oil for November settlement dropped 47 cents, or 0.7 percent, to $67.60 a barrel on the London-based ICE Futures Europe exchange at 11:11 a.m. Sydney time. The contract fell $1.12, or 1.6 percent, to $68.07 a barrel on Oct. 2.

Oil prices have also been depressed by rising supplies as Russia increased output 1.7 percent to a post-Soviet high in September from a year earlier after OAO Rosneft brought a new field on line in August. Total production rose to 10.01 million barrels a day from 9.84 million barrels in September last year, the Energy Ministry’s CDU-TEK unit said in an e-mailed statement Oct. 2.

Surpassing Saudis

“Russia again saw record production levels, so that’ll hang on the market,” Pervan said.

The figure puts Russian output about 25 percent higher than that of Saudi Arabia, the world’s largest producer in 2008, according to U.S. Energy Department data and Bloomberg estimates.

The kingdom pumped 8.015 million barrels a day last month, according to a Bloomberg report published Oct. 1. It has cut output by 17 percent from 9.6 million barrels a day in July 2008 as part of an effort by the Organization of Petroleum Exporting Countries to curtail shipments to support prices.