Oil Trades Near One-Week Low

Crude oil traded near a one-week low in New York as U.S. consumer confidence dropped to the lowest level since October 1992, signaling a slowdown in the world's biggest oil user amid record energy prices.

U.S. consumer confidence declined to the lowest in more than 15 years, a report yesterday showed. Gasoline prices in the U.S. rose to a record as the May-to-September summer driving season started over the weekend, according to AAA, the nation's largest motorist organization.

Crude oil for July delivery was at $128.82 a barrel, down 3 cents, on the New York Mercantile Exchange at 9:56 a.m. in Singapore. The contract had fallen as much as 75 cents, or 0.6 percent, to $128.10, the lowest intraday price since May 20.

Yesterday, oil fell more than $3 a barrel in the biggest one-day drop since April 29 to close at $128.85. Futures reached $135.09 on May 22, the highest since trading began in 1983, and have doubled in the past year.

Brent crude oil for July settlement was at $128.19 a barrel, down 12 cents, on London's ICE Futures Europe exchange at 9:06 a.m. Singapore time. It declined $4.06, or 3.1 percent, to settle yesterday at $128.31 a barrel, the biggest decline since March 31. The contract touched a record $135.14 on May 22.

Fuel usage in the U.S. 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.

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. A report also showed property prices in March tumbled the most in at least seven years.

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. motorists were forecast to make 1 percent fewer automobile journeys of at least 50 miles during last weekend's holiday than a year ago, the AAA said May 15.

Gasoline for June delivery was at $3.3810 a gallon, down 0.2 cent, on the Nymex at 9:34 a.m. Singapore time. The contract fell 1.3 cents, or 0.4 percent, to settle at $3.383 a gallon in New York yesterday.

Pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 0.1 cent to an all-time high of $3.937 a gallon, AAA said yesterday on its Web site.

The average pump price of diesel in California rose above $5 a gallon for the first time the week ended May 26, the U.S. Energy Department said.

TradingEconomics.com, Bloomberg
5/27/2008 7:37:00 PM