Oil Falls More Than $2

Crude oil fell more than $2 a barrel in New York on signs that U.S. fuel consumption is dropping because of a slowing economy and record energy prices.

U.S. consumer confidence fell to the lowest level in more than 15 years, a report today showed. The dollar rose against the euro today, curbing the appeal of commodities to investors. Energy and metals have become attractive in the past year to those seeking to offset the dollar's fall against the euro.

Crude oil for July delivery fell $2.07, or 1.6 percent, to $130.12 a barrel at 11:24 a.m. on the New York Mercantile Exchange. Futures reached $135.09 on May 22, the highest since trading began in 1983. Prices have doubled over the past year.

Brent crude oil for July settlement declined $2.18, or 1.7 percent, to $130.19 a barrel on London's ICE Futures Europe exchange. The contract touched a record $135.14 on May 22.

The Conference Board's confidence index declined more than forecast to 57.2, the lowest level since October 1992, from a revised 62.8 in April, the New York-based research group said today. A report earlier today showed property prices in March tumbled the most in at least seven years.

The euro reversed gains versus the dollar after reports showed German consumer confidence fell more than economists forecast and French business confidence declined to the weakest in more than two years in May.

The peak U.S. gasoline consumption period lasts from this past weekend's Memorial Day holiday until Labor Day in early September, as Americans take to the highways for vacations.

U.S. fuel consumption averaged 20.3 million barrels a day in the four weeks ended May 16, down 1.3 percent from a year earlier, the Energy Department said last week.

TradingEconomics.com, Bloomberg
5/27/2008 9:27:24 AM