Crude Oil Falls in New York as Deepening Recession Cuts Demand

By Christian Schmollinger

Jan. 6 (Bloomberg) -- Crude oil fell in New York on speculation that a deepening recession in the U.S., the world’s biggest energy consumer, and the U.K. will limit fuel demand.

An Institute for Supply Management index of U.S. service industries, which make up almost 90 of the economy, probably dropped to the lowest level since records started in 1997, according to a Bloomberg News survey. U.K. consumer confidence fell to the lowest since at least 2004 in December, Nationwide Building Society, a mortgage lender, said today.

“In the near-term I see the direction of oil dependent on the state of the global economy and the economy isn’t likely to show any hopeful signs until late this year,” said Victor Shum, a senior principal with Purvin & Gertz Inc. in Singapore. “The negative economic sentiment will constrain any strengthening in prices.”

Oil for February delivery declined as much as much as $1.06, or 2.2 percent, to $47.75 a barrel in electronic trading on the New York Mercantile Exchange. It was at $47.78 a barrel at 3:56 p.m. Singapore time.

Futures yesterday rose $2.47, or 5.3 percent, to $48.81 a barrel, the highest settlement since Dec. 1. Prices have rallied 35 percent since Dec. 24.

Brent crude oil for February settlement fell as much as 95 cents, or 1.9 percent, to $48.67 a barrel on London’s ICE Futures Europe exchange. It was at $48.77 a barrel at 3:57 p.m. Singapore time. The contract yesterday added $2.71, or 5.8 percent, to $49.62 a barrel.

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