Oil Falls as Investors Judge Gains Excessive; Gold Pares Gains

By Christian Schmollinger

Nov. 5 (Bloomberg) -- Crude oil fell in New York as investors judged yesterday's 10 percent gain as excessive on signs of slowing fuel demand after U.S. auto sales dropped to their lowest in 17 years.

Gold also declined in Asia as oil's retreat reduced the appeal of commodities as an alternative asset. Barack Obama, who favors a windfall-profit tax on petroleum producers and boosting renewable energy, was elected the 44th U.S. president. U.S. auto purchases tumbled 32 percent, sliding lower for the 12th straight month, according to a survey from manufacturers.

``It was a big rally yesterday so we're seeing a bit of profit-taking today,'' said Toby Hassall, an analyst at Commodity Warrants Australia Ltd. in Sydney. ``We had auto and truck sales data last night which was just abysmal and that's just another indication of weak demand.''

Crude oil for December delivery declined as much as $2.08, or 3 percent, to $68.45 a barrel on the New York Mercantile Exchange. It was at $68.50 a barrel at 1:33 p.m. Singapore time. Prices, which have tumbled 53 percent since reaching a record $147.27 on July 11, are down 27 percent from a year ago.

Futures rose $6.62, or 10 percent, to $70.53 a barrel yesterday, the highest settlement since Oct. 21. It was the biggest one-day gain since Sept. 22.

Oil prices were boosted by the biggest presidential- election day rally in the U.S. stock markets in 24 years and the fading dollar. The currency was little changed at $1.2870 per euro at 12:17 p.m. Singapore time after declining 2.6 percent yesterday to $1.2966 per euro.

`Irrational Market'

``It's a bit irrational with no one looking at the fundamentals and looking at the stock market as an indication of how the economy is doing,'' said Clarence Chu, a trader at options marketers Hudson Capital Energy in Singapore. ``When the dollar falls, people are like buy, buy, buy.''

The Reuters/Jefferies CRB Index of 19 raw materials climbed 5.3 percent to 278.22 yesterday, the highest since Oct. 22. The gauge lost 42 percent since reaching a record in July as the credit crunch choked worldwide growth.

Bullion for immediate delivery fell as much as 1 percent, or $7.28, to $755.97 an ounce today, before trading at $756.40 at 12:15 p.m. in Singapore. Gold gained $39.80 yesterday to $763.25 an ounce.

Saudi Arabia has cut crude supplies to some customers ``significantly'' after last month's Organization of Petroleum Exporting Countries meeting, Reuters reported, citing people it didn't identify.

OPEC decided at a meeting in Vienna last month to cut the production target for 11 of the group's members by 1.5 million barrels a day, from 28.8 million barrels a day.

Algeria's energy ministry ordered state-owned oil company Sonatrach to lower output by 71,000 barrels a day as of Nov. 1, state-run Algerian Press Service reported.

U.A.E. Cuts

The United Arab Emirates, OPEC's fourth-largest oil producer, is implementing the supply cuts agreed on by the group and has informed consumers, Oil Minister Mohamed al-Hamli told reporters in Abu Dhabi Nov. 3. He declined to specify the size of the reduction.

Brent crude oil for December settlement fell as much as $2.04, or 3.1 percent, to $64.40 a barrel on London's ICE Futures Europe exchange. It was at $64.40 a barrel at 1:33 p.m. Singapore time. The contract increased $5.96, or 9.9 percent, to settle at $66.44 a barrel yesterday, the highest since Oct. 21.

Oil inventories probably rose 1 million barrels from 311.9 million barrels in the week ended Oct. 24. Refinery use probably rose to the highest since August.

The Energy Department will report weekly inventory statistics at 10:35 a.m. Washington time today.

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