Oil dropped from a seven-week high, on concern fuel demand will drop after China’s economy weakened and analysts gave up their profit forecasts for the European companies.
Futures dropped 0.7% yesterday, July 17th, after advancing a fifth day, the longest run from April 2012. China’s Premier Wen Jiabao announced that the country’s labor situation is rapidly worsening. More than 12,000 estimates show that by the end of this year profits at Euro Stoxx 50 Index will increase 6.8%.
“I don’t think we have a very strong momentum on the oil market because the economy is not that strong in Europe, the U.S. and China,” said Ken Hasegawa, a commodity-derivative sales manager at Newedge Group in Tokyo. “We would expect some profit taking after five days of gains.”
Oil for August delivery decreased 63 cents to $88.59 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for September dropped 78 cents (0.8%) to $103.22 a barrel, on the London-based ICE Futures Europe exchange.
According to specialists oil in New York increased too fast for further gains to be sustainable. For the first since March the 30-day stochastic oscillators passed 70, a level showing that price gains are exaggerated.