Oil Trades Near 11-Week Low After Falling on Demand Concerns

Dec. 15 (Bloomberg) -- Crude oil traded near an 11-week low in New York after falling as economic reports raised concerns that demand will be slow to recover.

Oil dropped for a ninth day yesterday, the longest losing stretch in eight years, amid declining industrial output in Europe and the smallest improvement this year in consumer confidence in Japan, the third-largest oil-consuming country.

“You won’t have a truly healthy crude market and be able to argue for crude going above $80 until you see the developed market, North America, Europe and Asia, turn around,” said Roger Read, an analyst with Natixis Bleichroeder in Houston. Oil will trade in a $60-to-$80 range in the coming months, he said.

Crude oil for January delivery traded at $69.64 a barrel, up 13 cents, in electronic trading on the New York Mercantile Exchange at 10:14 a.m. in Sydney. Yesterday, the contract fell 36 cents to $69.51, the lowest settlement since Sept. 29.

European industrial output fell for the first time in six months in October, led by a slump in consumer goods. European employment declined in the third quarter. The Tankan business confidence index in Japan showed large companies planned deeper spending cuts to protect earnings under threat from the yen, which climbed to a 14-month high against the dollar in November.

Prices have fallen because of a “slow recovery” in demand in developed markets, according to a Goldman Sachs Group Inc. report issued yesterday. Oil has dropped 11 percent since Dec. 1 in the longest decline since July 2001.

Price ‘Suitable’

Prices are “very suitable,” between $70 and $80 a barrel, and it’s unlikely that the Organization of Petroleum Exporting Countries will change its output levels when it meets next week in Angola, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said yesterday in Kuwait City.

U.S. oil inventories probably fell 2 million barrels last week from 336.1 million barrels in the week ended Dec. 4, based on the median estimate of 10 analysts surveyed by Bloomberg News, all of whom predicted a decline. Supplies are 4.8 percent higher than a year ago.

Refinery utilization probably increased by 0.4 percentage point to 81.5 percent, the survey showed.

Brent crude oil for January settlement gained 1 cent to $71.89 a barrel on the London-based ICE Futures Europe exchange yesterday.