Crude oil fell to a seven-week low as a report showed that Organization of Petroleum Exporting Countries is bolstering output to cut prices and fuel consumption in the U.S. and Asia drops. The Organization of Petroleum Exporting Countries increased output by 200,000 barrels a day in July, according to preliminary estimates from PetroLogistics Ltd. Oil slipped more than $24 a barrel from the $147.27 record on July 11, as fuel use declined.
``The oil market over the last two weeks has begun to focus on the larger fundamentals, which are bearish,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Today's PetroLogistics report on OPEC output points to further increases in supply. The U.S. gasoline market is about as weak as I've ever seen during the summer months.''
Crude oil for September delivery fell $2.23, or 1.8 percent, to settle at $123.26 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the lowest settlement price since June 4. The contract fell 4.8 percent this week.
Organization of Petroleum Exporting Countries will provide 32.9 million barrels a day this month, up 200,000 barrels from June, PetroLogistics founder Conrad Gerber said in an e-mail from Geneva. The 13-member group produces more than 40 percent of the world's oil.
Saudi Arabia, in response to calls from consuming nations, said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July to curb prices. The Saudis increased supplies to world markets to 9.45 million barrels a day this month, from 9.32 million a day in June, PetroLogistics said.
``The Saudis can produce more, but they can't sell it,'' Gerber said in a telephone interview. ``The demand's not there.''
Declining Demand
U.S. fuel demand averaged 19.9 million barrels a day last week, the lowest since January 2007, the Energy Department reported on July 23. U.S. gasoline consumption fell 3.3 percent from a year ago, the 13th consecutive weekly decline, a MasterCard Inc. report on July 22 showed.
Gasoline for August delivery fell 2.71 cents, or 0.9 percent, to $3.0323 a gallon in New York, the lowest settlement price since May 2. Futures reached a record $3.631 a gallon on July 11.
Pump prices are following changes in futures. Regular gasoline, averaged nationwide, fell 2 cents to $4.006 a gallon, AAA, the nation's largest motorist organization, said on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
Asian Consumption
Record prices are also cutting fuel use in Asia, reports this week showed.
Japanese oil imports fell for the first time in nine months, the government said yesterday. South Korea consumed less fuel for the eighth straight month in June, state-run Korea National Oil Corp. said on July 22. The U.S., Japan and South Korea are the world's first, second and fifth biggest oil importers, according to the U.S. Energy Department.
``There's more concern about the economy seeping into the oil market,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts.
New-home sales in the U.S. in June decreased 0.6 percent to an annualized 530,000 pace, from an upwardly revised 533,000 in May, the Commerce Department said today in Washington. A separate report showed orders for durable goods unexpectedly rose in June.
``The durable goods report was surprisingly strong, but that's just one number in a big constellation of bearish numbers,'' Mueller said. ``The housing sector is still very weak, and that's hurting the entire economy.''
Bookings for goods made to last several years gained 0.8 percent and posted the first consecutive monthly rise since July 2007, the Commerce Department said today in Washington.
Saving Energy
``Some of the spending on durable goods isn't bullish for energy,'' Evans said. ``If an airline is buying new, more efficient engines for its planes, that will count as a durable good but it will cut energy consumption. There are a lot of home improvements and equipment upgrades occurring that will cut energy demand.''
Pilots resumed guiding tankers and other deep-draft ships through Galveston Bay, site of the biggest U.S. petroleum port, after rough seas generated by Hurricane Dolly subsided, the U.S. Coast Guard said. Royal Dutch Shell Plc, Europe's biggest oil company, said it is sending personnel back to platforms in the Gulf of Mexico that were evacuated before Dolly's arrival.
Dolly, the first hurricane to hit the Gulf Coast this year, weakened to a tropical depression yesterday. It made landfall along the U.S.-Mexico border July 23 as a Category 2 hurricane. The storm's remnants were centered near the U.S.-Mexican border just south of the Big Bend region of Texas at 10 a.m. local time, the U.S. National Hurricane Center said.
Brent crude oil for September settlement declined $1.92, or 1.5 percent, to close at $124.52 a barrel on London's ICE Futures Europe exchange, the lowest settlement price since June 4.
``The oil market over the last two weeks has begun to focus on the larger fundamentals, which are bearish,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Today's PetroLogistics report on OPEC output points to further increases in supply. The U.S. gasoline market is about as weak as I've ever seen during the summer months.''
Crude oil for September delivery fell $2.23, or 1.8 percent, to settle at $123.26 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the lowest settlement price since June 4. The contract fell 4.8 percent this week.
Organization of Petroleum Exporting Countries will provide 32.9 million barrels a day this month, up 200,000 barrels from June, PetroLogistics founder Conrad Gerber said in an e-mail from Geneva. The 13-member group produces more than 40 percent of the world's oil.
Saudi Arabia, in response to calls from consuming nations, said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July to curb prices. The Saudis increased supplies to world markets to 9.45 million barrels a day this month, from 9.32 million a day in June, PetroLogistics said.
``The Saudis can produce more, but they can't sell it,'' Gerber said in a telephone interview. ``The demand's not there.''
Declining Demand
U.S. fuel demand averaged 19.9 million barrels a day last week, the lowest since January 2007, the Energy Department reported on July 23. U.S. gasoline consumption fell 3.3 percent from a year ago, the 13th consecutive weekly decline, a MasterCard Inc. report on July 22 showed.
Gasoline for August delivery fell 2.71 cents, or 0.9 percent, to $3.0323 a gallon in New York, the lowest settlement price since May 2. Futures reached a record $3.631 a gallon on July 11.
Pump prices are following changes in futures. Regular gasoline, averaged nationwide, fell 2 cents to $4.006 a gallon, AAA, the nation's largest motorist organization, said on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
Asian Consumption
Record prices are also cutting fuel use in Asia, reports this week showed.
Japanese oil imports fell for the first time in nine months, the government said yesterday. South Korea consumed less fuel for the eighth straight month in June, state-run Korea National Oil Corp. said on July 22. The U.S., Japan and South Korea are the world's first, second and fifth biggest oil importers, according to the U.S. Energy Department.
``There's more concern about the economy seeping into the oil market,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts.
New-home sales in the U.S. in June decreased 0.6 percent to an annualized 530,000 pace, from an upwardly revised 533,000 in May, the Commerce Department said today in Washington. A separate report showed orders for durable goods unexpectedly rose in June.
``The durable goods report was surprisingly strong, but that's just one number in a big constellation of bearish numbers,'' Mueller said. ``The housing sector is still very weak, and that's hurting the entire economy.''
Bookings for goods made to last several years gained 0.8 percent and posted the first consecutive monthly rise since July 2007, the Commerce Department said today in Washington.
Saving Energy
``Some of the spending on durable goods isn't bullish for energy,'' Evans said. ``If an airline is buying new, more efficient engines for its planes, that will count as a durable good but it will cut energy consumption. There are a lot of home improvements and equipment upgrades occurring that will cut energy demand.''
Pilots resumed guiding tankers and other deep-draft ships through Galveston Bay, site of the biggest U.S. petroleum port, after rough seas generated by Hurricane Dolly subsided, the U.S. Coast Guard said. Royal Dutch Shell Plc, Europe's biggest oil company, said it is sending personnel back to platforms in the Gulf of Mexico that were evacuated before Dolly's arrival.
Dolly, the first hurricane to hit the Gulf Coast this year, weakened to a tropical depression yesterday. It made landfall along the U.S.-Mexico border July 23 as a Category 2 hurricane. The storm's remnants were centered near the U.S.-Mexican border just south of the Big Bend region of Texas at 10 a.m. local time, the U.S. National Hurricane Center said.
Brent crude oil for September settlement declined $1.92, or 1.5 percent, to close at $124.52 a barrel on London's ICE Futures Europe exchange, the lowest settlement price since June 4.
Source: Bloomberg|By Mark Shenk
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