Crude Oil Trades Near $79 on Weakening Storm, U.S. Economic Growth Concern

Crude oil traded near $79 a barrel in New York after dropping from an 11-week high as Tropical Storm Bonnie weakened and on concern that the pace of fuel demand recovery in the U.S. may falter.

Oil declined as Bonnie degenerated to a “disorganized area of low pressure.” Prices also fell amid forecasts that the U.S. economy expanded at a slower pace in the second quarter. Gross domestic product rose at a 2.5 percent annual pace after increasing at a 2.7 percent rate in the first three months of the year, according to economists surveyed by Bloomberg News before a July 30 Commerce Department report.

“It’s still a case of U.S. demand not being particularly strong and that’s a reflection really of a pretty tepid U.S. economic recovery,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. “The market also seems to have removed some of that weather premium that had been built in response to the threat posed with Bonnie.”

Crude oil for September delivery traded at $79.03 a barrel, up 5 cents, on the New York Mercantile Exchange at 9:35 a.m. Singapore time. The contract fell 32 cents, or 0.4 percent, to $78.98 on July 23 after reaching $79.30 on July 22, the highest close since May 5. Futures are up 16 percent from a year ago.

Storms are closely watched in the Gulf, partly because they may topple oil production platforms and rupture pipelines. The Gulf accounts for about 31 percent of U.S. oil output and 10 percent of its natural-gas production, according to the Energy Department. The coast along Louisiana and Texas is home to 42 percent of U.S. refining capacity.

Brent crude for September settlement traded at $77.69 a barrel, up 24 cents, on the London-based ICE Futures Europe exchange at 9:35 a.m. Singapore time. The contract dropped 37 cents, or 0.5 percent, to $77.45 on July 23.