Oil Extends Decline on Euro Debt Crisis, U.S. Recovery Concern

May 21 (Bloomberg) -- Crude oil extended its decline in New York on concerns Europe will struggle to contain the sovereign- debt crisis and doubts about the strength of the economic recovery in the U.S., the world’s largest energy consumer.

Oil fell for the seventh time in eight days yesterday as French Finance Minister Christine Lagarde said countries that share the euro need greater coordination. The index of U.S. leading economic indicators unexpectedly fell in April, and the most Americans in a month filed applications for unemployment benefits. Crude inventories rose for the 15th time in 16 weeks in the seven days ended May 14.

“The contagion effect across Europe is very real,” said Peter McGuire, managing director at CWA Global Markets Pty in Sydney. “There is just so much uncertainty in the market. Oil was probably overpriced in the high 80s and I think it’s probably got a little more to the downside.”

Crude oil for July delivery dropped 78 cents, or 1.1 percent, to $70.02 a barrel, in electronic trading on the New York Mercantile Exchange at 10:15 a.m. Sydney time. The July contract has fallen 7.7 percent this week.

Yesterday, the June contract dropped $1.86, or 2.7 percent, to $68.01, the lowest settlement since Sept. 29. June futures expired at the close of floor trading.

The 0.1 percent decrease in the index of U.S. leading economic indicators signaled that the economic expansion may slow in the second half of 2010. It was the first drop in a year for the New York-based Conference Board’s measure of the outlook for three to six months. It followed a revised 1.3 percent gain in March.

OPEC Shipments

The Organization of Petroleum Exporting Countries will ship 23.53 million barrels a day in the four weeks to June 5, compared with 23.25 million a day in the month to May 8, the Halifax, England-based tanker-tracker Oil Movements said yesterday. That’s the first reported increase in five weeks. The data exclude Ecuador and Angola.

U.S. crude oil stockpiles rose 162,000 barrels to 362.7 million in the week ended May 14, said the Energy Information Administration, the statistical unit of the Energy Department. Supplies were forecast to increase 500,000 barrels, according to the median estimate from 15 analysts surveyed by Bloomberg News.

Initial jobless claims in the U.S. rose by 25,000 to 471,000 in the week ended May 15, the highest level since April 9, Labor Department figures showed yesterday in Washington. Applications were projected to drop to 444,000, according to the median estimate of 44 economists in a Bloomberg News survey.

Brent crude oil for July settlement dropped 73 cents, or 1 percent, to $71.11 a barrel on the London-based ICE Futures Europe exchange at 10:18 a.m. Sydney time. Yesterday the contract declined $1.85, or 2.5 percent, to end the session at $71.84.

Soybeans Rise as Cheaper Supply May Boost U.S. Export Demand

May 20 (Bloomberg) -- Soybeans rose for the first time in more than a week on speculation that the lowest prices since March will boost demand for supplies from the U.S., the world’s largest grower and shipper.

Exporters in the U.S. sold 478,462 metric tons during the week ended May 13, double the average from the prior four weeks, the Department of Agriculture said today. Of the total, 60,000 tons were purchased by China, the world’s biggest importer. Argentina farmers are withholding newly harvested supplies in a bet the peso will plunge, boosting returns on exports, Rosario- based commodity trader Alabern, Fabrega y Cia said.

“Export sales were very good and constructive for prices,” said Anne Frick, a vice president of research for Prudential Bache Commodities LLC in New York. “Argentina and Brazil are not selling their crops, and that is boosting demand for U.S. supplies” at a time when importers usually shift to newly harvested soybeans from South America, Frick said.

Soybean futures for July delivery rose 5.5 cents, or 0.6 percent, to $9.44 a bushel on the Chicago Board of Trade, after losing 2.8 percent since May 11. The commodity touched $9.31 today, the lowest level for the most-active contract since March 31.

Annual consumption in China will increase by as much as 8 percent in the next three or four years as the livestock industry expands, boosting demand for high-protein feed, said Robert Day, the general manager of South China operations for Cargill Inc., the largest privately held U.S. company.

Chinese Imports

Soybean imports by China have outpaced forecasts for five years, Day said. The USDA this month raised its import estimate for the marketing year through Sept. 30 to 46 million tons from 43.5 million in April, and predicted 49 million tons for 2010- 2011.

The country “will continue to create more wealth for its citizens,” Day said at an industry meeting in Dongguan May 18. “It will continue to consume more meat, which means it will continue to need more grain and oilseed products.”

Combined soybean output in Brazil and Argentina, the biggest exporters behind the U.S., will jump 36 percent this year to a record 122 million tons, the USDA estimates.

Farmers in Argentina are storing their soybeans to preserve wealth as President Cristina Fernandez de Kirchner pursues a weak-peso policy intended to stimulate exports from the country, South America’s second-largest economy. The sales slowdown has boosted prices in Argentina and Brazil, making U.S. exports more competitive for shipments to Asia from ports in the Pacific Northwest, Frick said.

Stockpiling Supply

Argentine producers are stockpiling beans in special bags on their farms rather than selling the crops, according to Omar Barchetta, a vice-president of the Rosario-based Argentine Agrarian Federation farmers group.

“There was talk yesterday that as much as 250,000 tons of sales from South America were switched to the U.S.,” Frick said. “Prices will likely rise until we see increased exports from South America or cancelations of U.S. sales” from China, Frick said.

The soybean crop in the U.S. was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.