WHY YOU CAN EXPECT PRICES TO FALL FURTHER THIS WEEKEND…. UNLESS BIG OIL REFUSES TO PASS ON THE SAVINGS | Tomorrow's Gas Price Today
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WHY YOU CAN EXPECT PRICES TO FALL FURTHER THIS WEEKEND…. UNLESS BIG OIL REFUSES TO PASS ON THE SAVINGS

Oil Falls Most in Two Weeks on Economic Growth Concern

 Oct. 19 (Bloomberg) — Oil tumbled the most in two weeks as Microsoft Corp. and General Electric Co. missed quarterly sales forecasts, raising concern that slowing economic growth will reduce oil demand.

Prices dropped as much as 2.4 percent and the Standard & Poor’s 500 Index declined for a second day on the companies’ results and as euro-area leaders failed to discuss further aid for Spain at a summit. Oil also retreated as the euro weakened against the dollar on concern the debt crisis is worsening.

“The weak earnings are making people nervous about the shape of the economy and about oil demand,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The dollar is up and stocks are down, and that’s pushing oil lower.”

Crude for November delivery fell $1.77, or 1.9 percent, to $90.33 a barrel at 1:21 p.m. on the New York Mercantile Exchange. Earlier, prices touched $89.93 in the biggest intraday decrease since Oct. 5. Futures have slipped 1.7 percent this week and are down 8.6 percent this year.

Brent for December settlement dropped $1.60, or 1.4 percent, to $110.82 a barrel on the London-based ICE Futures Europe exchange.

The S&P 500 index slumped as much as 1.5 percent after both Microsoft and GE reported revenue that fell short of analysts’ predictions.

Microsoft, the largest software maker, said yesterday that the fiscal first quarter was affected by declining sales of Windows, its flagship operating system. GE cut its 2012 revenue- growth forecast after reporting weaker third-quarter demand for some industrial equipment and quicker progress in a plan to shrink the finance business.

U.S. Supplies

U.S. oil stockpiles jumped to a two-month high last week as output reached the most in 17 years, the Energy Department said Oct. 17. Gasoline demand has slipped 6.2 percent since August.

“The economy is the primary driver in the market,” said said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We have a well-supplied market in the U.S. and demand is weak.”

Spanish Prime Minister Mariano Rajoy said after the euro- region summit in Brussels that his nation doesn’t feel that it’s under any pressure to ask for a bailout, fueling concern the debt crisis will be prolonged. Germany and France agreed to enforce common banking regulation for the euro area’s 6,000 lenders by the end of 2013.

Euro Falls

The euro fell 0.4 percent against the dollar. A weaker euro and stronger dollar reduce oil’s investment appeal.

“The macro economy is overshadowing the market,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “There is a lot of disappointment after the EU meeting in Brussels.”

Oil also declined after futures failed to sustain gains above $93 a barrel, said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. Oil rose earlier as TransCanada Corp. shut the Keystone pipeline to the U.S.

“We have such big resistance at $93 and the outside broader market is running the show,” he said. “The dollar is up and we have stocks falling.”

TransCanada closed the 590,000-barrel-a-day Keystone line Oct. 17 for three days of repairs after finding an “anomaly” in a section running from Missouri to Illinois. Keystone moves oil from Canada to Cushing, Oklahoma, the delivery point for New York futures.

Keystone Restart

The company plans to restart the line tomorrow, James Millar, a company spokesman in Calgary, said in an e-mail yesterday. TransCanada may have to deliver extra crude in November to make up for what shippers will lose this month as a result of the shut-in, he said.

“The news about Keystone initially drove prices up, but as people digested it, they realized it’s not as important as they thought,” Lynch said.