By Grant Smith
LONDON - Oil declined in New York for the first time in five days as European economic confidence worsened, fanning concern that fuel consumption may slow.
West Texas Intermediate futures dropped as much as 0.8 percent, reversing an earlier gain of 0.9 percent. An index of executive and consumer sentiment in euro area dropped to 87.9 this month from 89.9 in June, the European Commission said in Brussels. That’s the lowest since September 2009. The euro dropped as much as 0.8 percent against the dollar. Crude had advanced on speculation that European policy makers will act to resolve the region’s debt crisis.
“The stronger dollar is weighing on commodities today,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.
Crude for September delivery fell as low as $89.40 a barrel in electronic trading on the New York Mercantile Exchange, and was at $89.55 as of 1:41 p.m. London time.
Brent oil for September settlement was at $105.76 a barrel, down 71 cents on the London-based ICE Futures Europe exchange. The European benchmark crude was at a $16.21 premium to New York-traded West Texas Intermediate grade. The spread was $16.34 on July 27, the widest since May 22.
The European Central Bank’s Governing Council is scheduled to meet Aug. 2 in Frankfurt and gauge the effect of its July decision to cut the benchmark interest rate to a record low of 0.75 percent. The U.S. Federal Reserve’s Federal Open Market Committee will consider the need for more stimulus at a two-day meeting that ends Aug. 1.
ECB President Mario Draghi will meet U.S. Treasury Secretary Timothy Geithner in Frankfurt today. Draghi is also trying to persuade policy makers to agree on a multi-pronged approach to reduce bond yields in countries such as Spain and Italy, two central bank officials said July 27, asking not to be identified because the talks are private.