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Crude Oil Trades Near $74 as Fed Expects ‘Moderate’ U.S. Growth
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By Paul Burkhardt and Ben Sharples

Dec. 8 (Bloomberg) -- Crude oil traded near $74 a barrel in New York after falling as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will face a weak labor market and tight credit, signaling fuel demand will be slow to recover.

Oil dropped a fourth day yesterday as Bernanke said a “moderate” pace of expansion for the economy is likely. Inflation remains “subdued” and might even move lower, he said. The Energy Department will likely say tomorrow that oil stockpiles rose last week, a Bloomberg News analyst survey shows.

“It’s the fundamentals at the end of the day that are driving crude lower,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Crude oil for January delivery traded at $74.16 a barrel, up 23 cents, in electronic trading on the New York Mercantile Exchange at 10:16 a.m. Sydney time. Yesterday, the contract fell $1.54, or 2 percent, to $73.93. Prices have climbed 66 percent this year.

U.S. crude inventories probably gained 500,000 barrels last week, according to the median response of nine analysts surveyed by Bloomberg News before an Energy Department report tomorrow in Washington.

The dollar traded at $1.4826 per euro at 10:03 a.m. in Sydney, from $1.4827 yesterday. A stronger dollar limits investors’ need for assets such as oil to hedge against inflation.

Brent crude oil for January settlement dropped $1.09, or 1.4 percent, to end the session at $76.43 a barrel on the London-based ICE Futures Europe exchange yesterday.

To contact the reporter on this story: Paul Burkhardt in New York at [e-mail]; Ben Sharples in Melbourne at [e-mail]
Last Updated: December 7, 2009 18:32 EST