Crude Oil Falls From Near One-Year High on Recovery Concerns

Oct. 22 (Bloomberg) -- Crude oil dropped from a one-year high in New York on concern that the pace of economic recovery in the U.S., the world’s biggest energy-consuming nation, may falter.

Oil pared yesterday’s 2.8 percent gain, when it touched a high $82 a barrel, as U.S. equities dropped in the final hour of trading. Rochdale Securities analyst Dick Bove downgraded Wells Fargo & Co., prompting stocks to erase a rally spurred by better-than-estimated results at Morgan Stanley and Yahoo! Inc.

“We have seen oil fall back in price due to the complete reversal of the equities markets,” said Mike Sander, an investment adviser at Sander Capital in Seattle.

Crude oil for December delivery fell 54 cents, or 0.7 percent, to $80.83 a barrel in electronic trading on the New York Mercantile Exchange at 9:45 a.m. Sydney time. Yesterday, the contract rose $2.25 to $81.37, the highest settlement since Oct. 9, 2008. Prices are up 81 percent this year.

Wells Fargo, the largest U.S. home lender this year, slid 5.1 percent after Bove cut the shares to “sell” and said earnings were boosted by mortgage-servicing fees rather than improving business trends. The Standard & Poor’s 500 Index lost 0.9 percent and the Dow Jones Industrial Average fell 92.12 points or 0.9 percent.

The dollar traded at $1.5015 per euro at 9:34 a.m. in Sydney, after declining 0.5 percent yesterday, when it touched $1.5046, the weakest level since August 2008. A weaker dollar encourages investors to buy commodities as a hedge against inflation.

Crude Supplies

Inventories of crude oil rose 1.31 million barrels to 339.1 million, the highest level since August, an Energy Department report showed. Supplies were forecast to climb by 1.5 million barrels by analysts in a Bloomberg News survey. The gain left stockpiles 9.4 percent above the five-year average for the period, the department said.

Supplies of distillate fuel, a category that includes heating oil and diesel, fell 784,000 barrels to 169.9 million, according to the department.

Gasoline stockpiles dropped 1.1 percent to 206.9 million barrels last week, the report showed. Inventories were forecast to decrease by 850,000 barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.

Brent crude oil for December settlement climbed $2.45, or 3.2 percent, to end the session at $79.69 a barrel on the London-based ICE Futures Europe exchange yesterday.