Oil Drops, Extending Quarterly Loss, as U.S. Demand Falters

Oil dropped, extending its first quarterly loss in a year, amid signs of faltering fuel demand in the U.S., the world’s biggest crude consumer.

Futures in New York dropped as much as 0.7 percent, halting the biggest two-day rally in seven weeks. The U.S. Energy Department said yesterday gasoline demand dropped for a second week in the seven days to June 24. U.S. pump prices are up 29 percent from a year earlier.

“The situation with very high gasoline prices isn’t sustainable,”Christophe Barret, a London-based oil analyst at Credit Agricole SA, said by phone. “The Energy Department figures weren’t that supportive.”

Crude for August delivery fell as much as 62 cents to $94.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.57 as of 9:57 a.m. London time. The contract climbed yesterday $1.88 to $94.77, completing a two-day gain of 4.6 percent, the most since May 10. Futures are down 11 percent this quarter.

Brent oil for August settlement was down $1.10 a barrel at $111.30. The European benchmark, down 5.2 percent in the second quarter, traded at a premium of $16.83 to New York-traded West Texas Intermediate. The spread reached a record $22.29 a barrel on June 15.

Source: http://www.bloomberg.com/news/2011-06-30/oil-drops-extending-quarterly-loss-as-u-s-demand-falters.html