USD 92.2628

-0.33

EUR 99.7057

-0.56

Brent 86.99

+0.1

Natural gas 1.752

-0

579

Oil Declines a Fourth Day on China Rate Speculation

Oil fell for a fourth day as speculation that Chinese fuel demand may slump outweighed signs that U.S. consumption is increasing

Oil Declines a Fourth Day on China Rate Speculation

Futures retreated as much as 1.4 percent after Chinese Premier Wen Jiabao said the government was drafting measures to counter inflation in the world’s biggest energy consumer. Prices also fell on concern Europe’s debt crisis is worsening as ministers considered a rescue package for Irish banks. U.S. crude inventories dropped the most since September 2008 and gasoline demand increased, reports showed yesterday.

“Risk is being taken off the table across the entire commodities complex as the dollar gets stronger,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. “In such an environment fundamentals such as the sharp drop in crude stockpiles don’t matter.”

Crude for December delivery fell as much as $1.16 to $81.18 a barrel in electronic trading on the New York Mercantile Exchange. It was at $81.57 at 8:44 a.m. London time. Brent crude for January settlement traded at $83.81, down 92 cents, on the ICE Futures Europe exchange in London.

Yesterday, the New York contract fell $2.52 to $82.34, the lowest settlement since Oct. 29, while the Brent futures lost $2.03 to $84.73.

Oil dropped as Wen’s comments, broadcast yesterday on state television, stoked speculation the government may raise interest rates to damp economic growth. The Bank of Korea yesterday increased borrowing costs after inflation surged past the central bank’s ceiling.

Europe’s Crisis

European finance ministers started work on possible aid for Ireland’s debt-laden banks, stopping short of an immediate bailout package. The country’s crisis is stoking concern that Europe’s debt problems are spreading, weakening the euro versus the dollar and reducing investor demand for commodities priced in the U.S. currency.

The dollar climbed as much as 1 percent to $1.3448 against the euro yesterday, the highest level since Sept. 28. It was little changed today.

Crude inventories dropped 7.7 million barrels last week, the American Petroleum Institute said yesterday. An Energy Department report today will probably show that supplies were unchanged, according to a Bloomberg News survey. Oil-supply estimates from the two organizations have moved in the same direction in seven of the past eight weeks.

“Finally we have some good news on the fundamental front and everything else is undermining it,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “Part of it seems to be some concern that China might tighten policy. You have what markets perceive to be an increased probability of a further loss of global confidence with the European debt concerns resurfacing.”

Holiday Demand

U.S. travel during the Thanksgiving holiday weekend will rise 11 percent from last year on improved economic conditions, AAA, the nation’s biggest motoring organization, said yesterday. Gasoline consumption at the pump climbed for the first time in four weeks, Mastercard Inc. said in its SpendingPulse report.

U.S. gasoline inventories dropped 1.65 million barrels to 214.6 million last week, the API report showed. Supplies probably fell by 750,000 barrels, according the survey of the Energy Department report.


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