Crude Oil Falls on Concern Demand to Slow

By Christian Schmollinger and Hector Forster

Feb. 28 (Bloomberg) -- Crude oil fell for the first time in more than a week as a global stocks plunge raised concern that economic growth may slow and cut fuel demand.

U.S. benchmark indexes tumbled, erasing all of 2007's gains, after a selloff in China spread and sparked the biggest rout in four years. U.S. durable goods orders dropped 7.8 percent in January, reflecting the biggest slide in business equipment demand in three years.

Crude oil for April delivery fell as much as $1.54, or 2.5 percent, to $59.92 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the biggest intraday drop since Feb. 20. It traded at $60.40 at 3:35 p.m. Singapore time.

Economic growth in China, which consumes about 9 percent of the world's oil, helped push crude prices to an all-time high last year. Chinese oil demand will jump 32 percent to 9.4 million barrels a day in 2011 from 7.1 million barrels a day in 2006, the International Energy Agency said on Feb. 6.

``China is one of those outlier extra demand areas,'' said Rowan Menzies, commodity market analyst with Commodity Warrants Australia in Sydney. ``So if that slows down that would obviously reduce the buffer between demand and supply.''

Asian stocks fell the most in more than eight months, extending a rout in global equities that started in China and triggered a slump in the U.S.

In the U.S, the Dow Jones Industrial Average dropped as much as 546 points, the most since the first trading day after the Sept. 11, 2001, terrorist attacks. Chinese stocks yesterday fell the most since 1997 after the government took measures to crack down on excess speculation that had driven shares to records.

Brent crude oil for April settlement lost as much as $1.12, or 1.8 percent, to $60.24 a barrel on the London-based ICE Futures exchange. It traded at $60.50 a barrel at 3:35 p.m. Singapore time.

Gold rose in Asia as investors sought a haven amid the Asian stocks decline.

Gold for immediate delivery gained as much as $9.30, or 1.4 percent, to $672.65 an ounce and traded at $671.95 at 3:33 p.m. Singapore time. It fell as much as $23.20 to $663.35 yesterday, its biggest decline since Oct. 3.

Crude-oil stockpiles probably climbed 2 million barrels from 327.6 million barrels the prior week, according to the median of responses. Fourteen analysts expected an increase and one said there was a decline.