Oil Heads for Third Weekly Loss on Europe

Oil headed for a third weekly decline in New York on concern that Greece will have to leave the euro currency union, deepening Europe’s debt crunch and curbing fuel demand.

Futures fell as much as 1 percent after German Finance Minister Wolfgang Schaeuble said that financial market turmoil caused by the euro-zone crisis may last two more years. Prices are heading for the third straight weekly decline as U.S. consumer confidence dipped and American crude supplies climbed to the highest level since 1990.

“All of the macroeconomic news has been negative,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “Oil is moving on what’s happening in Europe and what it will mean here. In February, people were afraid to sell oil and now they’re afraid to buy it.”

Crude oil for June delivery fell 13 cents to $92.43 a barrel at 10:52 a.m. on the New York Mercantile Exchange. The contract touched $91.60, the lowest level since Nov. 3. Prices have retreated 3.8 percent so far this week.

Brent oil for July settlement gained 28 cents to $107.77 a barrel on the London-based ICE Futures Europe exchange. The European benchmark dropped to $106.40, the lowest level since Dec. 21.

The Brent contract may decline to the $99 to $100 lows seen in August and September after breaking though long-term support in the $108.50-$109.20 area, according to a note by Stephanie Aymes, a technical analyst at Societe Generale SA in London.
G-8 Meeting

Schaeuble’s comments came as Group of Eight leaders including German Chancellor Angela Merkel prepared to discuss Greece and its impact on the global economy. The G-8 meeting begins tonight at the Camp David presidential retreat in rural Maryland. The group includes the U.S., U.K., Germany, France, Italy, Japan, Russia and Canada.

Silke Bruns, a Finance Ministry spokeswoman, said today that the German government has a duty to prepare for a potential Greek exit from the euro zone.

Greece’s credit rating was downgraded one level late yesterday by Fitch Ratings amid concern that the country won’t be able to muster the political support needed to sustain its membership in the euro area.

“It’s pretty well known that whatever happens in Europe, it’s probably going to have a negative impact on the U.S. economy,” said Jacob Correll, a commodity analyst at Summit Energy Inc. in Louisville, Kentucky. “The momentum for the global crude complex in the short term is moving lower.”

Home prices in China fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts. China is the second-biggest crude consuming country after the U.S.

“The latest news out of China suggests that they are not seeing good growth, and that will weigh on the oil market,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.