Wednesday, February 24, 2010

Oil Trades Below $80 After Falling on U.S. Consumer Confidence

Feb. 24 (Bloomberg) -- Crude oil traded below $80 a barrel in New York after declining as confidence among U.S. consumers dropped in February to the lowest level in 10 months, a signal that energy demand may be slow to increase.

Oil fell yesterday from a five-week high as the Conference Board’s confidence index weakened to 46, below the lowest forecast in a Bloomberg News survey of economists, from a revised 56.5 in January. German business confidence also declined for the first time in 11 months.

“The weak macro data doesn’t auger well for a recovery in fuel demand,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “Fuel demand in the U.S. and a lot of the Western economies remains soft.”

Crude oil for April delivery was at $79.03 a barrel, up 17 cents, in electronic trading on the New York Mercantile Exchange at 8:24 a.m. Singapore time. Yesterday, the contract dropped $1.45 to $78.86, the biggest decline since Feb. 5.

The report by the Conference Board, a New York-based private research group, also indicated that more people believe jobs are difficult to obtain, a sign spending may be slow to gain traction as the economy recovers.

Economists forecast the confidence index would decrease to 55 from a previously reported 55.9 January reading, according to the median of 68 projections in the Bloomberg survey. Estimates ranged from 50.9 to 59.

Crude Supplies

The American Petroleum Institute reported yesterday that U.S. crude-oil stockpiles decreased 3.14 million barrels to 334.4 million last week. Gasoline inventories rose 1.74 million barrels, the API said.

The Energy Department is due to release its inventory figures in Washington today. Crude supplies probably increased 1.9 million barrels in the week ended Feb. 19, from 334.5 million, according to the median of responses in a Bloomberg News survey of analysts. It would be a fourth consecutive gain.

The Ifo institute in Munich reported yesterday that its business climate index, based on a survey of 7,000 executives, fell to 95.2 in February from 95.8 in January. Economists expected a gain to 96.1, according to the median of 37 forecasts in a Bloomberg News survey.

Brent crude oil for April settlement declined $1.36, or 1.7 percent, to $77.25 a barrel on the ICE Futures Europe exchange in London yesterday.