Crude Oil Falls a Second Day as Slowing Economy Damps Demand

Crude oil fell for a second day, extending the biggest monthly decline since 2004, on concern global consumption is falling amid slowing economic growth.

Demand is faltering in the U.S., the world’s largest energy user, where data due today may show the unemployment rate at its highest in four years, according to a Bloomberg survey. Manufacturing in China, the world’s second-biggest energy consumer, contracted for the first time since a survey of purchasing managers began in 2005.
“The growing prospect of demand destruction in the U.S., and potentially other parts of the world, combined with technical indicators that suggest it’s time to sell, is keeping prices under pressure,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.

The U.S. economy shrank at the end of 2007 and grew less than forecast in this year’s second quarter. Gross domestic product increased at a 1.9 percent annualized rate, the Commerce Department said in Washington yesterday, compared with the median projection of 2.3 percent in a Bloomberg News survey.

“U.S. economic indicators are weighing heavily on sentiment,” said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. “Negative refining margins are discouraging refiners from making gasoline.”

Bloomberg