June 26 (Bloomberg) -- Oil was little changed in New York after a storm avoided the Gulf of Mexico’s energy-producing area and amid speculation European leaders will fail to stem its debt crisis that threatens to curb fuel demand.
Futures traded below $80 a barrel for a fourth day, near an eight-month low, after Tropical Storm Debby was forecast to bypass the western Gulf and oil companies began returning workers to platforms. Germany’s Chancellor Angela Merkel hardened her resistance to sharing euro-area debt, while HSBC Holdings Plc cut its growth forecast for China, the world’s second-biggest crude user. A government report tomorrow may show U.S. gasoline stockpiles rose for the third time in four weeks.
“Market sentiment remains negative, focusing on slow demand and ample supply,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The supply risk that supported oil is fading as production resumes in the Gulf of Mexico.
Oil for August delivery fell as much as 50 cents to $78.71 a barrel in electronic trading on the New York Mercantile Exchange and was at $79.02 as of 1:07 p.m. in London. The contract yesterday slipped 55 cents to $79.21, the lowest close since June 21. Prices have fallen 23 percent this quarter, the biggest drop since the final three months of 2008.
Brent crude for August settlement rose 46 cents to $91.47 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $12.43, compared with $11.80 yesterday.
Investors should sell Brent in favor of WTI after the difference between the two grades widened, according to Dennis Gartman, author of the Suffolk, Virginia-based Gartman Letter.
“This we think is the time then to sell Brent and buy WTI, having watched as the spread has been narrowing almost relentlessly and still likely to make its way toward parity, if not beyond, remembering that Brent sold for many years at a $1- to-$2-a-barrel discount to WTI,” he wrote today.
Tropical Storm Debby will move over northern Florida in a day or two before weakening to a depression and re-emerging later this week in the Atlantic, the National Hurricane Center said in a 5 a.m. Miami time advisory.
Weather forecasters initially said there was a chance the storm would pass through the heart of the U.S. Gulf’s energy- producing area, home to 29 percent of oil production and 40 percent of refinery capacity. Companies including ConocoPhillips and BP Plc had halted 44 percent of oil and 35 percent of gas output in the Gulf of Mexico, according to the U.S. Bureau of Safety and Environmental Enforcement late yesterday.