Oil, Gold Fall as Equities Decline on Slowing Economy Concern

By Christian Schmollinger

Nov. 11 (Bloomberg) -- Crude oil, gold and soybeans fell as equities dropped because of a worsening outlook for company earnings, renewing concern the global financial crisis will curtail energy and commodity demand.

Oil slumped as Japanese stock markets started the day down 1.6 percent, following a drop in U.S. equities. The Standard & Poor's 500 Index retreated 1.3 percent yesterday, extending last week's 3.9 percent slide. Crude rose yesterday on a $586 billion Chinese economic stimulus plan.

``The weakness in equity markets is adding to concerns about the international economic outlook and what that means for consumption,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``Even with the stimulus plan in China and interest rate cuts elsewhere, the markets are still worried about slower growth.''

Crude oil for December delivery fell as much as $2.12, or 3.4 percent, to $60.29 a barrel on the New York Mercantile Exchange. It was at $60.41 a barrel at 9:53 a.m. Singapore time. Oil slumped 10 percent last week as equities dropped, U.S. fuel stockpiles rose more than expected and the nation's unemployment rate climbed to a 14-year high.

Prices, which have tumbled 59 percent since reaching a record $147.27 on July 11, are down 36 percent from a year ago. Yesterday, oil rose $1.37, or 2.2 percent, to $62.41 a barrel, and also dropped to $59.10, the lowest since March 20, 2007.

The Group of 20 nations said it's prepared to act ``urgently'' and called for lower interest rates. OPEC, the International Energy Agency and the U.S. Energy Department have cut fuel-demand forecasts over the past month.

Commodities

Gold for immediate delivery was down $1.2 at $745.00 an ounce as of 9:30 a.m. Singapore time and platinum fell $10, or 1.2 percent, to $847.00 an ounce. Soybeans for delivery in January delivery in Chicago dropped 10.75 cents, or 1.1 percent, to $9.3725 per bushel and copper for three-month delivery in London was down $5 at $3,870 a metric ton.

U.S. crude-oil supplies probably rose for a seventh week as imports rebounded, a Bloomberg News survey of analysts showed. Stockpiles probably increased 500,000 barrels in the week ended Nov. 7 from 311.9 million the week before, according to the median of nine analyst estimates before an Energy Department report this week.

Gasoline inventories probably climbed 500,000 barrels from 196.1 million barrels the week before, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1.1 million barrels from 127.8 million barrels the week before, according to the survey.

The Energy Department is scheduled to release its weekly report on Nov. 13 at 11 a.m. in Washington. The report is being delayed by a day because of the Veterans Day holiday tomorrow.

IEA Forecast

Brent crude oil for December settlement fell as much as $1.74, or 3 percent, to $57.34 a barrel, on London's ICE Futures Europe exchange and traded at 9:11 a.m. Singapore time. The contract increased $1.73, or 3 percent, to settle at $59.08 a barrel yesterday.

The International Energy Agency may cut its 2009 oil demand forecast for a third month as the threat of the worst recession since World War II saps fuel consumption, former IEA analysts said.

The Paris-based adviser to 28 oil consuming nations will reduce the estimated growth in global demand from 700,000 barrels a day, or 0.8 percent, in its next monthly report on Nov. 13, said four analysts who used to work at the IEA and are now at banks. The International Monetary Fund last week warned of the first simultaneous recession in the U.S., Japan and Europe in more than 60 years.

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