Oil Heads for Biggest Weekly Drop Since 2004

Crude oil was little changed in New York, poised for the biggest weekly drop since 2004, after a U.S. employment report reinforced concerns over a recession in the world's biggest energy user.

Oil has declined 12 percent this week as higher borrowing costs and reports showing a worsening economy spurred skepticism that the U.S. government's $700 billion bank-bailout plan will stimulate growth. U.S. payrolls fell by 159,000 in September, the most in five years, the Labor Department said today.

Crude oil for November delivery traded at $94.92 a barrel, 45 cents higher, on the New York Mercantile Exchange as of 1:56 p.m. London time, after falling as much as $1.16 to $92.81 a barrel.

Yesterday, futures dropped $4.56, or 4.6 percent, to $93.97 a barrel in New York. Oil has declined 37 percent from its record $147.27 on July 11. The weekly drop is the biggest since Dec. 3, 2004.

Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have tumbled 9.9 percent this week, the most since at least 1956. The index has slumped 31 percent from a record on July 3.

U.S. fuel use during the past four weeks averaged 19 million barrels a day, the weakest since October 2001, an Energy Department report showed earlier this week. U.S. payrolls fell by 159,000, more than anticipated, after a 73,000 decline in August, the Labor Department said today in Washington.

The House of Representatives will today reconsider a revised $700 billion financial rescue package submitted by the Senate, after rejecting a previous version on Sept. 29.

The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said in its most pessimistic outlook for the world's largest economy since the credit crisis began last year.

Brent crude oil for November settlement rose 43 cents, or 0.5 percent, to $90.99 a barrel on London's ICE Futures Europe exchange as of 1:59 p.m. London time, after declining as much as 90 cents to $89.66 a barrel.

TradingEconomics.com, Bloomberg.com
10/3/2008 6:25:06 AM