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Thursday, August 04, 2011 10:06 PM

Oil Wipes Out Gains for the Year

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Bloomberg reports Oil Heads for Biggest Weekly Drop Since May

Oil fell in New York, heading for the biggest weekly decline in three months and wiping out its gain for the year, on speculation fuel demand will falter as the U.S. economy weakens and the European debt crisis worsens.

Futures dropped as much as 1.1 percent after slumping 5.8 percent yesterday. U.S. consumer confidence slid to the lowest in more than two months, a report showed. Italian and Spanish bonds surged to records amid speculation Europe will fail to contain its sovereign-debt crisis.

Crude for September delivery dropped as much as 95 cents to $85.68 a barrel in electronic trading on the New York Mercantile Exchange at 11:38 a.m. Sydney time. The contract yesterday tumbled $5.30 to $86.63, the lowest settlement since Feb. 18. Prices are down 10 percent for the week and 6 percent in 2011.

“Economic worries in the U.S. led to fears that oil demand will soften dramatically,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said in an e-mailed note today. “Traders were buffeted by fears that the global economy is slowing, nations are embracing austerity and the euro-zone debt crisis is spreading.”
Petroleum Usage Shows Definite Economic Downturn

In case you missed it, please consider my timely report two days ago: Petroleum Distillates Demand Shows "Definite Economic Downturn Starting April/May 2011"

Mike "Mish" Shedlock
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