WTI Crude Declines as Fuel Demand Drops Amid Economic Weakness

West Texas Intermediate crude fell for the fifth time in six days amid signs of economic weakness in the U.S. and Europe that threaten fuel demand.

Futures slid as much as 0.4 percent in New York. U.S. industrial production dropped the most in eight months in April, manufacturing in the New York region unexpectedly shrank in May and the euro-area economy contracted more than forecast in the first quarter. A measure of U.S. fuel consumption declined by 584,000 barrels last week to 18.5 million barrels a day, Energy Information Administration data of 15 May showed.

WTI for June delivery lost as much as 39 cents to $93.91 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.98 in Singapore. The volume of all contracts traded was 17 percent above the 100-day average. Prices erased a drop of as much as 2.2 percent to close 9 cents higher at $94.30 as investors speculated central banks will act to boost their economies.

Brent for June settlement, which expires on 16 May, slid as much as 45 cents, or 0.4 percent, to $103.23 a barrel on the London-based ICE Futures Europe exchange. The more actively traded July future was down 33 cents at $103.17. The European benchmark crude was at a premium of $9.31 to WTI. The spread was $9.38 on 15 May, the widest since April 26. It closed at $7.65 on May 13, the narrowest since January 2011.

Fuel Demand

U.S. gasoline consumption slid 1.2 percent last week to 8.34 million barrels a day, the lowest level since March 15, according to the report from the EIA, the Energy Department’s statistics unit. Demand for distillate fuels, including heating oil and diesel, decreased 2.4 percent.

Gasoline stockpiles rose 2.59 million barrels to 217.7 million, the biggest gain since January, the data showed. Supplies were expected to decrease 1.1 million barrels. Distillate inventories climbed 2.3 million barrels to 119.9 million, more than a 475,000-barrel gain projected in the survey.

Europe Contraction

Output at U.S. factories, mines and utilities in April decreased 0.5 percent after a revised 0.3 percent gain in March that was weaker than previously reported, the Federal Reserve said on 15 May. Manufacturing in New York, northern New Jersey and Connecticut declined for the first time since January, the Federal Reserve Bank of New York said.

Gross domestic product in the 17-nation euro area fell 0.2 percent in the three months ended March after a 0.6 percent decline in the previous quarter, the European Union’s statistics office in Luxembourg said. That extends the currency bloc’s recession to a record sixth quarter.

The European Union accounted for 16 percent of the global oil consumption in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. The U.S. is the largest consumer and used 21 percent.