Crude oil fell for a second day in New York after declining the most since March yesterday as record prices reduced demand for gasoline and jet fuel.
U.S. fuel demand declined 0.7 percent to 20.5 million barrels a day in the four weeks ended May 23 from a year ago, the Energy Department said yesterday. The dollar headed for a second monthly advance against the euro and the yen, dimming the appeal of commodities as an inflation hedge.
Crude oil for July delivery fell as much as $1.95, or 1.5 percent, to $124.67 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $125.30 at 8:48 a.m. London time.
Yesterday, the contract declined $4.41, or 3.4 percent, to settle at $126.62 a barrel, the lowest close since May 16 and the biggest drop since March 31. Futures reached a record $135.09 May 22.
Brent crude oil for July settlement fell as much as $1.89, or 1.5 percent to $125 a barrel on London's ICE Futures Europe exchange, and traded at $125.55 at 8:49 a.m. London time. The contract touched a record $135.14 on May 22.
U.S. crude oil inventories fell 8.88 million barrels to 311.6 million last week, the Energy Department reported yesterday. It was the biggest drop since Sept. 17, 2004, when Hurricane Ivan forced the closure of U.S. oil platforms in the Gulf of Mexico. The decline was caused by ``temporary delays'' in unloading tankers, the department said.
Gasoline demand last week was 1.2 percent lower than the same week last year, the U.S. Energy Department report yesterday showed. Stockpiles fell 1.6 percent to 206.2 million barrels as refiners kept processing below year-earlier rates.