Oil trades near two-week low on U.S., Europe economic concern

Oil traded near a two-week low in New York, heading for a weekly decline, as worse-than-forecast U.S. economic data and concern that Europe’s outlook is faltering boosted speculation that demand for fuel may ease.

Futures were little changed after dropping 2.6 percent yesterday, the most since December. European Central Bank President Mario Draghi said the region’s economic prospects had downside risks while reports showed service industries in the U.S. grew less than projected and consumer confidence weakened.

“Some of the recent U.S. and European data has been a little bit weaker, a little bit on the soft side,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said by telephone today. “The central assumption is that we’ll see moderate growth across the world, patchy in places.”

Crude for June delivery was at $102.55 a barrel, up 1 cent, on the New York Mercantile Exchange at 10:08 a.m. Sydney time. The contract yesterday slid $2.68 to $102.54, the lowest close since April 19. Prices are 2.3 percent lower this week, heading for the first weekly decline in three.

Brent oil for June settlement was at $115.96 a barrel, down 12 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $13.42, from $13.54 yesterday.

Economic Data

The Institute for Supply Management said yesterday its non manufacturing index fell to a four-month low of 53.5 in April from 56 in March. The median forecast of economists surveyed by Bloomberg News was 55.3. A reading above 50 in the Tempe, Arizona-based group’s gauge signals expansion. The Bloomberg Consumer Comfort Index fell to a two-month low last week.

The oil market showed “slight loosening” last quarter, though it’s too early to be sure that supply conditions have improved, Maria van der Hoeven, Executive Director at the International Energy Agency, said at an industry conference in Paris yesterday. The IEA, an adviser to 28 industrialized nations that has at times coordinated the release of emergency stockpiles, is ready to act again if a major disruption occurs, van der Hoeven said.

There is no shortage of oil in the market and the Organization of Petroleum Exporting Countries is “not happy” with current high crude prices, which may lead to demand destruction, OPEC Secretary-General Abdalla el-Badri said at the same conference.