Sunday, February 3, 2008

Crude Oil Falls for Third Day on Signs U.S. Growth Is Slowing

By Gavin Evans

Feb. 4 (Bloomberg) -- Crude oil fell for a third day in New York, extending a 1.9 percent decline last week, on signs growth in the U.S. economy, the world's largest oil user, may be slowing.

Oil dropped more than $2 a barrel on Feb. 1 after a report showed U.S. payrolls fell 17,000 in December, the first decline since August, 2003. The same day, the Organization of Petroleum Exporting Countries left its production targets unchanged, citing the risk of slowing global demand growth and the prospect of rising world stockpiles during the first-half.

``Given the volatility in financial markets, I think it was almost a certainty that OPEC was going to leave output unchanged,'' said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management Ltd. in Sydney.

Crude oil for March delivery fell as much as 43 cents, or 0.5 percent, to $88.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $88.54 at 10:17 a.m. in Sydney.

The contract slumped $2.79, or 3 percent, to $88.96 on Feb. 1, the lowest close since Jan. 23. Futures have dropped 11 percent from the record $100.09 a barrel reached on Jan. 3 as U.S. oil and fuel stockpiles rose and global equity markets weakened.

Brent crude for March settlement fell $2.77, or 3 percent, to $89.44 on London's ICE Futures Europe exchange on Feb. 1.

Oil prices were expected to decline this week, according to 63 percent of 35 analysts surveyed by Bloomberg News last week.

Hedge fund managers and other large speculators cut their bets on rising oil prices 20 percent, the U.S. Commodity Futures Trading Commission said Feb. 1. Net-long positions in New York oil futures, the difference between orders to buy and sell the commodity, fell to 29,845 contracts on Jan. 29, an 11-week low.

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