Oil Falls After Federal Reserve’s Outlook, Decline in Equities

July 15 (Bloomberg) -- Crude oil declined after the Federal Reserve’s assessment that the economic outlook has “softened” added to concerns a recovery in fuel demand may falter in the U.S., the biggest energy-consuming nation.

Oil fell after most U.S. equities dropped, halting a six- day rally, as a drop in retail sales and minutes from the Fed’s last meeting showed policy makers saw no need to boost economic stimulus even as they trimmed growth forecasts. U.S. crude supplies declined, while gasoline inventories climbed 1.6 million barrels last week, an Energy Department report showed.

“There are a growing number of indicators that point to a slowing U.S. economy,” said David Land, chief market analyst at CMC Markets Ltd. in Sydney. “The Federal Reserve’s revised assessment of the economy and weaker-than-expected retail sales figures put a dampener on things.”

Crude oil for August delivery dropped as much as 48 cents, or 0.6 percent, to $76.56 a barrel in electronic trading on the New York Mercantile Exchange and was at $76.62 at 9:57 a.m. Sydney time. Yesterday, the contract slipped 11 cents to settle at $77.04 after reaching $78.15, the highest intraday price since June 29. Futures have declined 3.5 percent since the start of the year.

Fuel demand tumbled 4 percent to 18.8 million barrels a day, the lowest level since April 23, the Energy Department report showed. It was the biggest one-week decline since March.

Sales at U.S. retailers dropped in June for a second month. Purchases decreased 0.5 percent, more than projected, after declining 1.1 percent in May, Commerce Department figures showed yesterday in Washington.

‘Softening’ Outlook

“The economic outlook had softened somewhat and a number of members saw the risks to the outlook as having shifted to the downside,” minutes released yesterday in Washington of Federal Reserve policy makers’ June meeting showed. “The changes to the outlook were viewed as relatively modest and as not warranting policy accommodation beyond that already in place.”

U.S. crude-oil supplies fell 5.06 million barrels to 353.1 million, the Energy Department said. Stockpiles were forecast to slip 1.5 million barrels, according to a Bloomberg News analyst survey. Refineries operated at 90.5 percent of capacity, the highest level since January 2008.

Inventories have dropped 12 million barrels in three weeks to the lowest level since March 19. It’s the longest string of declines since December.

Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 2.94 million barrels to 162.6 million, the department said. Inventories were forecast to rise by 1 million barrels.

Brent crude for August settlement increased 12 cents to end the session at $76.77 a barrel on the London-based ICE Futures Europe exchange yesterday. The contract expires today. The more- active September contract slipped 7 cents to $76.66 a barrel.