April 27 (Bloomberg) -- Crude oil fell the first time in a week on concern that the swine-flu outbreak will curtail travel and on forecasts that the U.S. economy will keep shrinking.
Oil dropped 2.7 percent as the World Health Organization weighed whether to raise its pandemic alert to an unprecedented level today. The economy in the U.S., the world’s largest oil- consuming country, will continue to contract “for some time,” Lawrence Summers, director of the White House National Economic Council, said yesterday.
“If swine flu continues to expand, it will impact fuel demand,” said Chip Hodge, who oversees a $9 billion natural- resource-company bond portfolio as managing director at MFC Global Investment Management in Boston. “It’s a demand story, not a supply story, because supply has been plentiful. Prices will drop any time there’s a sign of a further drop in demand.”
Crude oil for June delivery fell $1.41 to settle at $50.14 a barrel at 2:49 p.m. on the New York Mercantile Exchange. Prices are up 12 percent this year.
WHO plans to say that swine flu is spreading across North America, two people familiar with the agency said. An increase above level 3 on the agency’s six-step alert system would be the first since the current pandemic risk scale was adopted in 2005. Geneva-based organization is the United Nations body that coordinates international public health.
“It would be bad for the economy if the swine flu were to impact the travel and tourism sectors,” said Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York. “There’s been an overreaction to the outbreak.” more...
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