BLBG: Oil Heads for Biggest Weekly Drop Since 2004 Before Jobs Report
By Grant Smith
Oct. 3 (Bloomberg) -- Crude oil was little changed in New York, poised for the biggest weekly drop since 2004, before a U.S. employment report expected to reinforce signs of a recession in the world's biggest energy user.
Oil has declined 12 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 U.S. probably lost jobs in September for a ninth month, according to a Bloomberg survey before today's Labor Department report.
``Risk aversion and liquidation of contracts are characterizing the oil market as well as many other markets at the moment,'' said Thina Saltvedt, a Nordea Bank AB analyst in Oslo. ``Prices are not only being set by fundamentals, but fears of how crises in the financial sector may spread to other parts of the economy.''
Crude oil for November delivery traded at $93.94 a barrel, 3 cents lower, on the New York Mercantile Exchange as of 1:12 p.m. London time, after falling as much as $1.16 to $92.81 a barrel.
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 during the past four weeks averaged 19 million barrels a day, the weakest since October 2001, an Energy Department report showed earlier this week. U.S. payrolls fell by 105,000 last month, the biggest decline in five years, according to the median estimate of economists surveyed by Bloomberg News.
The House of Representatives will today reconsider a revised $700 billion financial rescue package submitted by the Senate, after rejecting a previous version on Sept. 29.
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.
Brent crude oil for November settlement rose 20 cents, or 0.2 percent, to $90.76 a barrel on London's ICE Futures Europe exchange as of 1:13 p.m. London time, after declining as much as 90 cents to $89.66 a barrel.
To contact the reporter on this story: Grant Smith in London at email@example.com