BLBG: Oil Heads for Biggest Weekly Drop Since 2004 on Slowing Demand
By Christian Schmollinger
Oct. 3 (Bloomberg) -- Crude oil fell for a third day in New York, poised for the biggest weekly drop since 2004, on signs the U.S. is slipping into a recession, reducing fuel demand in the world's largest energy user.
Oil has declined 13 percent this week as higher borrowing costs and reports showing a worsening economy spurred skepticism that the U.S. government's $700 billion bank-bailout plan will stimulate growth. The number of futures held by traders in New York dropped to the lowest in more than two years as U.S. factory orders fell 4 percent, the most since 2006.
``It's difficult to see any bright side for oil or other commodities markets,'' said Tetsu Emori, a fund manager at Astmax Ltd. in Tokyo. ``People don't want to leave their money in commodities.''
Crude oil for November delivery fell as much as $1.16, or 1.2 percent, to $92.81 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $93 a barrel at 2:34 p.m. Singapore time.
Yesterday, futures dropped $4.56, or 4.6 percent, to $93.97 a barrel in New York. Oil has declined 37 percent from its record $147.27 on July 11. The weekly drop is the biggest since Dec. 3, 2004.
Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have tumbled 9.9 percent this week, the most since at least 1956. The index has slumped 31 percent from a record on July 3.
U.S. fuel use over the past four weeks averaged 19 million barrels a day, the weakest since October 2001, an Energy Department report showed earlier this week. Crude-oil and gasoline inventories increased last week, the department said.
House to Vote
The U.S. Senate passed a $700 billion financial-market rescue package loaded with inducements for the House of Representatives to approve the measure. The House rejected a version on Sept. 29. The legislative body will reconsider the Senate's bill today.
The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said in its most pessimistic outlook for the world's largest economy since the credit crisis began last year.
``Even if the financial bailout plan might be passed, it won't be helpful because it won't stem the fall,'' Astmax's Emori said.
Brent crude oil for November settlement declined as much as 90 cents, or 1 percent, to $89.66 a barrel on London's ICE Futures Europe exchange. It was at $89.70 a barrel at 2:35 p.m. Singapore time. The contract declined $4.77, or 5 percent, to settle at $90.56 a barrel yesterday, the lowest since Sept. 16.
To contact the reporter on this story: Christian Schmollinger in Singapore at email@example.com.