Crude Oil Drops Below $76 as Weaker U.S. Growth May Cut Demand

Nov. 25 (Bloomberg) -- Oil dropped below $76 a barrel in New York on speculation weaker growth in the U.S., the world’s largest energy consumer, may limit demand.

Oil declined to a five-week low yesterday after the Commerce Department said the U.S. economy expanded at a 2.8 percent annual rate in the third quarter, down from a prior estimate of 3.5 percent. The Energy Department will probably report today that crude-oil supplies climbed by 1.5 million barrels last week, according to a Bloomberg News survey.

“As long as there are tepid headlines about the economy, oil is going to be under pressure,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “We seem to be attracted to the lower end of the recent range and will probably test it before long.”

Crude oil for January delivery traded at $75.84 a barrel, down 18 cents, in electronic trading on the New York Mercantile Exchange at 10:27 a.m. in Sydney. Yesterday, the contract fell $1.54, or 2 percent, to $76.02, the lowest settlement since Oct. 14. Prices have gained 70 percent this year.

Oil market transactions may be lighter than normal through the end of the week because of the U.S. Thanksgiving holiday. There will be no floor trading on Nov. 26 and the market will close early on Nov. 27.

The Energy Department’s report on supplies in the week ended Nov. 20 is due at 10:30 a.m. in Washington. The American Petroleum Institute reported yesterday that U.S. crude-oil stockpiles increased 3.35 million barrels to 336.4 million last week.

Stockpiles ‘Too High’

Oil stockpiles worldwide are too high and nations must be careful about the amount of supply in the market, Nigerian Petroleum Minister Rilwanu Lukman said yesterday. The African country was OPEC’s eighth-biggest producer in October, according to a Bloomberg News survey.

The Organization of Petroleum Exporting Countries meets on Dec. 22 in Luanda, Angola, to discuss production targets. The group agreed at its Sept. 9 meeting in Vienna to maintain production quotas at 24.845 million barrels a day.

The Standard & Poor’s 500 Index declined 0.1 percent in New York yesterday and the Dow Jones Industrial Average slipped 0.2 percent to 10,433.71. The dollar traded at $1.4961 per euro at 10:16 a.m. in Sydney, from $1.4968 yesterday.

Brent crude oil for January delivery on the London-based ICE Futures Europe exchange declined $1, or 1.3 percent, to end the session at $76.46 a barrel yesterday.