Oil Trades Near 14-Week Low on Signs of Slowing Fuel Demand

By Christian Schmollinger

Aug. 13 (Bloomberg) -- Crude oil traded near the lowest in 14 weeks on speculation that a U.S. government report today will show refiners cut output, signaling a drop in demand in the world's largest energy consumer.

Refiners probably operated at 86.5 percent of capacity in the week ended Aug. 8, down 0.5 percentage point from a week earlier, according to a survey of analysts before an Energy Department report today. Plants ran at 92 percent of capacity at the same time last year.

``The refiners don't have to be operating that hard since they're not getting the gasoline demand, so clearly that highlights that demand is weak,'' said Mark Pervan, a senior commodity analyst at Australia and New Zealand Banking Group Ltd. in Melbourne. ``The general mood is still negative.''

Crude oil for September delivery was at $113.30 a barrel, up 29 cents, in after-hours electronic trading on the New York Mercantile Exchange at 9:24 a.m. Singapore time. Yesterday, futures lost $1.44, or 1.3 percent, to settle at $113.01 a barrel, the lowest close since May 1.

Oil has slipped 23 percent from a record $147.27 on July 11. Prices are up 58 percent from a year ago.

Currency Factor

Most energy and metals futures dropped as the U.S. dollar rose to a 5 1/2-month high versus the euro yesterday, weakening the appeal of commodities as a hedge against inflation.

The dollar traded at $1.4895 per euro at 8:28 a.m. in Tokyo, from $1.4926 yesterday.

The Standard & Poor's GSCI index of 24 commodities fell as much as 1.4 percent to a four-month low, as metals including lead, zinc and copper slumped. Gold declined for an eighth straight session, the longest slide since 2001. The GSCI index has fallen 22 percent from a record 893.859 on July 3, descending into bear-market terrain.

Brent crude oil for September settlement dropped $1.52, or 1.4 percent, to settle at $111.15 a barrel on London's ICE Futures Europe exchange yesterday, the lowest settlement price since May 1.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.