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Confidence in costumers decline

Confidence in costumers decline
Crude oil dropped to a one-month low after a report showed that confidence among U.S. consumers declined this month.

Crude oil dropped to a one-month low after a report showed that confidence among U.S. consumers declined this month.

Crude oil dropped to a one-month low after a report showed that confidence among U.S. consumers declined this month, a signal that fuel demand will decrease. Oil fell as much as 1.8 percent as the Reuters/University of Michigan preliminary index of consumer sentiment unexpectedly weakened. An Energy Department report yesterday showed that fuel consumption weakened last week to the lowest level since June. Supplies of crude oil, gasoline and distillate fuel, a category that includes heating oil and diesel, rose.

?The market is honing in on all the bearish news that"s out there,? said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. ?For the last four to six weeks there"s been some positive economic news, but there"s no evidence that demand has improved.?

Crude oil for December delivery fell 63 cents, or 0.8 percent, to $76.31 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices touched $75.57, the lowest level since Oct. 15. Futures, which are down 1.4 percent this week, have climbed 71 percent this year.

Price declines accelerated after the consumer sentiment report showed a decrease to 66 from 70.6 in October. The gauge was projected to rise to 71, according to the median forecast 69 economists.

Refineries operated at 79.9 percent of capacity, down 0.7 percentage point from the prior week, according to yesterday"s Energy Department report. The average rate during the first week of November over the previous five years was 87.1 percent of capacity.

"Economic Malaise"

?Stockpiles were up across the board and demand was down,? McGillian said. ?The fact that product inventories rose with refineries operating at less than 80 percent of capacity signals that the economic malaise is hitting demand.?

Gasoline stockpiles rose 2.56 million barrels to 210.8 million last week, yesterday"s report showed. The gain left supplies 4.8 percent higher than the five-year average for the period. Inventories of distillate fuel climbed 349,000 barrels to 167.7 million, 29 percent higher than average.

?Demand is very weak,? said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. ?There will have to be a sharp selloff of the dollar to turn this market around.?

A weak dollar has bolstered commodity prices over the past two years as investors purchased raw materials as an alternative investment. The dollar traded at $1.4922 per euro, from $1.485 yesterday.

?For the time being we have a lot of spare capacity, inventories are high and demand is only coming back slowly,? Francisco Blanch, head of global commodity research at Bank of America-Merrill Lynch in London, said in an interview with Bloomberg Radio. ?Oil prices will only go up as much as the U.S. dollar loses weight against other currencies.?

Saudi Upgrades

Saudi Arabia has started to expand and upgrade its oil and gas production and refining business at a cost of $100 billion to tap rising demand in Asia, Ali al-Naimi, the kingdom"s oil minister, said in a speech at Beijing University today.

?While we have been concerned over oil-price volatility and the contribution of other non-fundamental factors to such volatility, we have maintained that price extremes in the low and high ends are not sustainable,? al-Naimi said. ?They are detrimental to oil producers and consumers alike.?

Brent crude for December settlement declined 47 cents, or 0.6 percent, to $75.55 a barrel on the London-based ICE Futures Europe exchange.

www.TurkishMaritime.com.tr

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