(Bloomberg News) Oil dropped for a fourth day in New York, extending the biggest weekly decline since August as investors speculated Europe's sovereign debt crisis will cut fuel demand amid ample supplies.
Futures slipped as much as 3.1 percent, wiping out an earlier gain of 1.3 percent. Finance leaders at the annual International Monetary Fund meeting in Washington urged European policy makers to step up measures to counter the crisis. The region's troubles have helped slow demand for crude, Qatar's oil minister said yesterday. Declines may be limited as New York oil approached technical support levels.
"Everyone now fully understands the implications of Greece defaulting," said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. "The big key is whether or not the measures are going to help, and I think that's what we have to wait and see."
Crude for November delivery fell as much as $2.44 to $77.41 a barrel as was at $77.70 in electronic trading on the New York Mercantile Exchange at 2:25 p.m. Singapore time. Front-month prices slid 9.2 percent last week to $79.85, the lowest close since Aug. 9. Oil is down 15 percent this year in New York.
Brent futures for November settlement fell $1.53, or 1.6 percent, to $102.28 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $24.38 to U.S. futures, compared with a record $26.87 on Sept. 6, based on front-month settlement prices.
U.S. Treasury Secretary Timothy F. Geithner said at the IMF meeting that governments and the European Central Bank must defuse the "most serious risk now confronting the world economy." Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., forecast that advanced economies will stall over the next year as Europe slides into a recession.
The European financial crisis and general fears about the global economy have weakened demand for crude, Qatari Oil Minister Mohammed Saleh al Sada said yesterday in Doha. Supplies are adequate and the nation is pleased that Libya is starting to produce and export oil, he said.
Harouge Oil Operations, a joint venture between Libya's state-owned National Oil Corp. and PetroCanada, will begin pumping crude from the country's Amal field in a "few weeks," the company's chairman said. Full output of 100,000 barrels a day is expected to be reached by year's end, Abdulwahab Elnaami said yesterday at his office in the Libyan capital Tripoli.
Fighting in Libya since February has reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country's output fell to 45,000 barrels a day last month, according to Bloomberg estimates, compared with the 1.6 million barrels a day the nation pumped in January.
Crude in New York has long-term technical support at $76.28 a barrel on the weekly chart, according to data compiled by Bloomberg. That's the 38.2 percent Fibonacci retracement of the drop to $32.40 in December 2008 from a record high of $147.27 in July that year. Buy orders tend to be clustered close to chart- support levels.