Crude Oil Declines for a Third Day in New York on Signals Demand Weakening

Oil declined for a third day in New York as signs that the global economy is slowing stoked speculation that fuel demand may falter.

Futures slid as much as 0.8 percent today before reports that may show sales by U.S. retailers fell in May for the first time in 11 months and China’s industrial production slowed. Prices dropped to a four-week low yesterday after China said oil-product consumption slipped 4 percent and Standard & Poor’s cut Greece’s credit rating to the lowest held by a nation.

“The market is concerned about economic growth,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted crude in New York will average $100 a barrel this year. “The economics suggest oil should be lower rather than higher.”

Crude for July delivery declined as much as 75 cents to $96.55 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.67 at 11:37 a.m. Sydney time. The contract yesterday slid $1.99, or 2 percent, to $97.30, the lowest since May 17. Prices are 29 percent higher the past year.

Brent oil for July delivery fell 34 cents, or 0.3 percent, to $118.76 a barrel on the London-based ICE Futures Europe exchange. The more actively traded August contract lost 32 cents to $118.10. The European benchmark contract is at a record premium of $22.09 a barrel to U.S. futures.

Economic Reports

U.S. advance retail sales may drop 0.5 percent, after a 0.5 percent gain in April, according to the median forecast of 81 economists surveyed by Bloomberg News ahead of Commerce Department data today.

China’s industrial production growth may have slowed to 13.1 percent in May from 13.4 percent in April, a separate Bloomberg survey shows. Consumer price inflation, also scheduled for today, may have climbed to 5.5 percent from 5.3 percent.

China’s National Development and Reform Commission yesterday said the country’s daily consumption of fuels dropped to 650,000 metric tons in May while inventories rose. China is the world’s second-largest oil consumer, after the U.S.

S&P cut Greece’s credit rating to CCC. “There is a significantly higher likelihood of one or more defaults” in the country, the agency said.

“Almost every day, there is some fresh economic data that seems to fit better in an anemic recovery than in one that is robust or dynamic,” Peter Beutel, the president of Cameron Hanover Inc., an energy advisory company in New Canaan, Connecticut, said in a note e-mailed today.

U.S. Stockpiles

The most-active oil option yesterday was the July $90 put, a bet that prices will fall, which ended unchanged at 11 cents. The second-most active contract, the July $95 put, rose 21 cents to 58 cents.

An Energy Department report tomorrow may show U.S. gasoline supplies increased by 1 million barrels from 214.5 million, according to the median of eight analyst estimates in a Bloomberg News survey. Crude stockpiles probably fell 1.75 million barrels, the survey shows.

Royal Dutch Shell Plc’s Nigerian unit has declared force majeure on Bonny Light oil loadings for this month and July because of multiple fires on the Trans Niger pipeline, the company said in an e-mailed statement yesterday.

Shell originally planned to ship 243,333 barrels a day of Bonny Light in June and 204,839 barrels a day next month, according to loading programs obtained by Bloomberg News. Force majeure is a legal clause allowing companies to miss deliveries because of circumstances beyond their control.