May 27 (Bloomberg) -- Crude oil fell more than $2 a barrel in New York on signs that U.S. fuel consumption is dropping because of a slowing economy and record energy prices.
U.S. consumer confidence fell to the lowest level in more than 15 years, a report today showed. The dollar rose against the euro today, curbing the appeal of commodities to investors. Energy and metals have become attractive in the past year to those seeking to offset the dollar's fall against the euro.
``There's trepidation at these price levels,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. ``High energy prices are having a substantial impact on the economy and potentially on demand.''
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Crude oil for July delivery fell $2.23, or 1.7 percent, to $129.96 a barrel at 12:58 p.m. on the New York Mercantile Exchange. Futures reached $135.09 on May 22, the highest since trading began in 1983. Prices have doubled over the past year.
There was no floor trading in New York yesterday because of the Memorial Day holiday.
``After failing to break through $135 decisively last week, it appears we've put a resistance line there,'' Flynn said.
Brent crude oil for July settlement declined $2.42, or 1.8 percent, to $129.95 a barrel on London's ICE Futures Europe exchange. The contract touched a record $135.14 on May 22.
Consumer Confidence
The Conference Board's confidence index declined more than forecast to 57.2, the lowest level since October 1992, from a revised 62.8 in April, the New York-based research group said today. A report earlier today showed property prices in March tumbled the most in at least seven years.
The euro reversed gains versus the dollar after reports showed German consumer confidence fell more than economists forecast and French business confidence declined to the weakest in more than two years in May.
The euro fell to $1.573, from $1.5770 yesterday, after rising to $1.5818, the highest level since April 24.
Russia's oil production may rise to 12 million barrels a day after Prime Minister Vladimir Putin's government eases taxes, billionaire Chalva Tchigirinski said. Putin yesterday approved a tax-cut plan to stimulate oil output that may be sent to lawmakers this week.
Russian oil production fell to 9.72 million barrels a day in April, the lowest in 18 months, as costs rose to develop aging fields and to pursue new projects in remote areas. Russia is the world's biggest oil exporter after Saudi Arabia.
``The news from Russia is significant,'' said Tom Bentz, a broker at BNP Paribas in New York. ``I don't know how soon we will see the additional production but these are significant quantities.''
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