Crude Oil Extends Drop on Signs of Slowing U.S. Economy, Rising Stockpiles

Oil extended declines in New York as investors speculated that signs of a weakening U.S. economy and increasing crude stockpiles indicate fuel demand will falter in the world’s biggest consumer of the commodity.
Futures slid as much as 3.8 percent before a report today that may show service industries grew at the slowest pace in more than a year. Crude supplies at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, rose 2.4 percent on Sept. 1 from Aug. 31, according to DigitalGlobe Inc. London- traded Brent widened its premium to U.S. prices.
“Oil benchmarks slipped again as fears of slowing global growth weighed on demand sentiment,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. “Oil prices should primarily take direction from equity markets, so expect further selling pressure this week as markets remain jittery ahead of major policy discussions.”
Crude for October delivery fell as much as $3.25 to $83.20 a barrel in electronic trading on the New York Mercantile Exchange and was at $83.75 at 10:30 a.m. Sydney time. Floor trading was closed yesterday for the Labor Day holiday and electronic trades will be booked with today’s transactions for settlement purposes. The contract slipped 2.8 percent to $86.45 a barrel on Sept. 2. Prices are 12 percent higher the past year.
Brent oil for October settlement was at $110.13, up 5 cents, on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $26.38 to U.S. futures, compared with a record close of $26.21 on Aug. 19.
Cushing Supplies
Crude stockpiles held in floating-roof tanks at Cushing rose 850,000 barrels to 35.6 million, satellite images taken by Longmont, Colorado-based DigitalGlobe show. The Energy Department said last week that supplies, including floating and fixed tanks, totaled 33.1 million barrels as of Aug. 26.
The Institute for Supply Management’s non-manufacturing index fell to 51 last month, the lowest since January 2010, from 52.7 in July, according to the median of 59 forecasts in a Bloomberg News survey before a release today. Citigroup Inc. cut its 2011 global economic growth forecast yesterday to 3.1 percent from 3.7 percent.
Japan’s Nikkei 225 benchmark stock index fell 1.2 percent in Tokyo trading and Australia’s S&P/ASX 200 slid 1.5 percent in Sydney today as concern that Europe’s debt crisis is worsening sapped demand for riskier assets.