Oil is heading for a 35 percent decline this month as the Commerce Department reported that that consumer spending dropped in September. The U.S. contracted at a 0.3 percent annual pace in the third quarter, the department said yesterday. Rate cuts this week by the three biggest oil users, the U.S., China and Japan, failed to inspire confidence that a recession can be avoided.
Crude oil for December delivery fell $1.13, or 1.7 percent, to $64.83 a barrel at 10:47 a.m. on the New York Mercantile Exchange. Prices, which have tumbled 56 percent since reaching a record $147.27 on July 11, are down 31 percent from a year ago.
The monthly oil-price drop is set to surpass February 1986 as the worst month ever, when crude oil declined 30 percent to $13.26 a barrel.
Oil climbed more than $4 a barrel on Oct. 29, the biggest gain in a month, after the U.S. and China cut interest rates to spur economic growth. Prices also rose because the dollar fell the most against the currencies of six major U.S. trading partners since 1998.
Consumer spending declined 0.3 percent in September, following no change in August and July, the Commerce Department said today in Washington.
The department reported yesterday that consumer spending fell at a 3.1 percent annual pace, the first decline since 1991 and the biggest since 1980, after President Jimmy Carter imposed credit controls. Households cut spending on non-durable goods, like clothing and food, last quarter by the most since 1950.
Fuel consumption in the U.S. in August, measured in terms of products supplied by refiners, dropped to 17.4 million barrels a day, according to the Energy Department's Petroleum Supply Monthly. That was down from 19.1 million barrels in August 2007.
The 0.3 percent decrease in purchases was the biggest in four years and followed no change in August, the Commerce Department said today in Washington. The Federal Reserve's preferred measure of inflation cooled.
Iran said it will start to cut 199,000 barrels a day of its oil production as of tomorrow, following OPEC's decision to reduce supply, according to Iranian state-run news service IRNA. The Organization of Petroleum Exporting Countries agreed on Oct. 24 to cut production by 1.5 million barrels a day.
Brent crude oil for December settlement declined 93 cents, or 1.5 percent, to $62.78 a barrel on London's ICE Futures Europe exchange.