Crude oil futures prices fell for a third consecutive day in New York on concern an economic slowdown in the US will reduce demand and as the dollar rose, prompting investors to sell the commodity.

The dollar’s first weekly gain against the euro in a month last week triggered an exodus from commodities after the US Federal Reserve cut interest rates. US consumer spending slowed in February and home sales continued to drop, economists said before reports this week.

“Investors are re-allocating assets and taking profit from commodities to offset earlier losses from equities,” said Tetsu Emori, a fund manager at Astmax Co in Tokyo. “On the fundamentals side, things are gloomy with demand to drop.”

Crude oil for May delivery declined as much as US$1.64, or 1.6 per cent, to US$100.20 a barrel in electronic trading on the New York Mercantile Exchange. It traded at US$100.53 a barrel at 9.56 am Singapore time.

While New York crude oil fell 7.6 per cent last week, it’s still up 60 per cent from a year ago.

The dollar rose to $1.5405 against the euro at 8:49 am. Singapore time from $1.5433 on March 21.

The threat of recession and a credit freeze caused the US Federal Reserve to cut its main lending rate by three-quarters of a percentage point on March 18.

Total US implied fuel demand for the four weeks ended March 14 dropped 3.2 per cent from a year earlier, the Energy Department said on March 19.

US spending slows

US consumer spending was up 0.1 per cent last month, the smallest gain in more than a year.

Combined sales of new and existing homes dropped to the lowest level in at least nine years, government and private figures may also show.

The biggest job losses in five years and record fuel costs are eroding consumer confidence and spending.

Retail sales unexpectedly fell in February, paced by declines in purchases of autos, furniture, appliances and restaurant meals. The 0.6 per cent drop followed a 0.4 per cent gain in January, the Commerce Department said March 13.

Brent crude for May settlement fell $1.18, or 1.2 per cent, to US$99.20 a barrel at 9:43 am. Singapore time on London’s ICE Futures Europe exchange.

Goldman’s forecast

US crude oil prices are likely to fall toward US$90 a barrel this spring as the country's slowing economic growth encourages traders to exit commodity markets, Goldman Sachs Group Inc said in a report on March 20.

Commodities are undergoing “cyclical weakness” and fundamentals will reach their “weakest point” in April as economic conditions and high prices weigh on demand, Goldman analysts including Jeffrey Currie in London wrote in the report. Oil will rebound in the second half, returning to US$105 by the end of the year, they said.

Crude oil prices may fall this week as the dollar rebounds and the slowing US economy curbs consumption of fuels.