Tags: oil | demand | fall | weak

Oil Falls on Weaker Demand, Fears of No New Stimulus

Wednesday, 08 Aug 2012 03:32 PM

Oil in New York fell for the first time in four days after a government report showed fuel demand weakened last week and on concern that the Federal Reserve won’t implement additional stimulus measures.

Prices declined 0.3 percent as the Department of Energy said U.S. petroleum demand decreased for the first time in four weeks. The report also showed oil supplies dropped less than in an American Petroleum Institute reported yesterday. Dallas Fed President Richard Fisher said central banks may not have the capacity to undertake more stimulus.

“The DOE report is kind of anticlimactic and the market is a bit disappointed,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “The market is now focusing on the economy and it’s nervous about what’s the Fed is going to do.”

Crude for September delivery fell 32 cents to settle at $93.35 a barrel on the New York Mercantile Exchange after increasing to $94.72, the highest intraday level since May 15. Prices have fallen 5.5 percent this year.

Brent oil for September settlement rose 15 cents to $112.15 on the London-based ICE Futures Europe exchange.

Total products supplied, a measure of fuel consumption, dropped 204,000 barrels a day to 18.9 million last week, the first decline since the week ended July 6, the Energy Department said today.

U.S. Supply

Crude stockpiles fell 3.73 million barrels to 369.9 million, the department figures showed. Inventories were forecast to decline 1.55 million barrels, according to the median of 10 analyst estimates in a Bloomberg survey. The industry-funded API reported a decrease of 5.35 million barrels yesterday.

Gasoline inventories tumbled 1.8 million barrels to 206.1 million. Stockpiles were forecast to decrease 1.75 million barrels, according to the Bloomberg survey.

“Market momentum has shifted a little bit after the inventory report,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “People started to just cut and run.”

Fisher said in an interview today on “Bloomberg Surveillance” with Tom Keene that adequate economic stimulus already is in place.

“We’re at the risk of overburdening the central banks,” he said. “We keep applying what I call monetary Ritalin to the system. We all know there’s a risk of over-prescribing.”

Ritalin is a drug used to treat depression and hyperactivity in children.

Fed Chairman Ben S. Bernanke said July 17 that policy makers were studying options for further stimulus. The Fed refrained from announcing steps at a meeting last week.

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