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Oil falls below US$86 amid weak US economy signs
Source: Agencies |
October 21, 2011, Friday
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OIL fell below US$86 a barrel yesterday in Asia as further evidence of weak US economic growth undermined the 19 percent gain in crude prices over the past two weeks.
Benchmark crude for November delivery was down 54 cents at US$85.57 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract, which expires later yesterday, fell US$2.23 to settle at US$86.11 in New York on Wednesday.
Brent crude for December delivery was down 5 cents at US$108.34 a barrel on the ICE Futures Exchange in London.
Crude rose above US$89 early in US trading Wednesday, but reversed sharply amid concern the US economy remains wobbly. The Federal Reserve's "Beige Book" showed only a slight increase in consumer spending last month while the economy expanded modestly in the Fed's 12 bank regions.
Traders are anxious ahead of this weekend's meeting of European leaders. Global stock markets have rallied this month on expectations the meeting will produce a plan to contain the region's debt crisis, and failure to do so could send equities and commodities tumbling next week.
"This market continues to gyrate daily in response to shifts in risk sentiment," energy consultant Ritterbusch and Associates said.
Stock, currency and commodity markets will continue to "respond feverishly" to almost anything said by European officials about the prospects for the EU summit this weekend, Ritterbusch said.
Barclays Capital said it expects Brent to average US$115 next year as tighter crude supplies help offset slower growth in demand.
"The downside to oil prices is unlikely to be anything as severe" as during the 2008 to 2009 period when prices fell below US$35 a barrel, Barclays said.
In other Nymex trading, heating oil fell 0.2 cent to US$2.98 per gallon and gasoline futures dropped 1.5 cents to US$2.63 per gallon. Natural gas slid 1.4 cents to US$3.57 per 1,000 cubic feet.
Benchmark crude for November delivery was down 54 cents at US$85.57 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract, which expires later yesterday, fell US$2.23 to settle at US$86.11 in New York on Wednesday.
Brent crude for December delivery was down 5 cents at US$108.34 a barrel on the ICE Futures Exchange in London.
Crude rose above US$89 early in US trading Wednesday, but reversed sharply amid concern the US economy remains wobbly. The Federal Reserve's "Beige Book" showed only a slight increase in consumer spending last month while the economy expanded modestly in the Fed's 12 bank regions.
Traders are anxious ahead of this weekend's meeting of European leaders. Global stock markets have rallied this month on expectations the meeting will produce a plan to contain the region's debt crisis, and failure to do so could send equities and commodities tumbling next week.
"This market continues to gyrate daily in response to shifts in risk sentiment," energy consultant Ritterbusch and Associates said.
Stock, currency and commodity markets will continue to "respond feverishly" to almost anything said by European officials about the prospects for the EU summit this weekend, Ritterbusch said.
Barclays Capital said it expects Brent to average US$115 next year as tighter crude supplies help offset slower growth in demand.
"The downside to oil prices is unlikely to be anything as severe" as during the 2008 to 2009 period when prices fell below US$35 a barrel, Barclays said.
In other Nymex trading, heating oil fell 0.2 cent to US$2.98 per gallon and gasoline futures dropped 1.5 cents to US$2.63 per gallon. Natural gas slid 1.4 cents to US$3.57 per 1,000 cubic feet.
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