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Oil falls on disappointing economic news
Source: Agencies |
July 17, 2010, Saturday
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OIL prices fell yesterday after earnings reports from banks disappointed investors and a new survey showed that consumers are becoming more pessimistic.
Benchmark crude for August delivery slid 61 cents to settle at US$76.01 a barrel on the New York Mercantile Exchange.
The Dow Jones industrial average fell about 260 points, or 2.5 percent, and other major market indexes also plunged, spurred by lackluster earnings and sluggish economic data.
Stocks fell further after a twice-monthly survey from the University of Michigan and Reuters found that consumers' gloom is increasing. An index of consumer sentiment compiled from the survey fell to 66.5 in early July from 76. That was a bigger drop than expected.
The reports overshadowed a decline in the U.S. dollar, which is usually bullish for crude because it makes oil cheaper for buyers that hold other currencies.
The euro rose yesterday to its highest level in two months, topping US$1.30 as worried investors shift their focus from the European debt crisis to slowing growth in the U.S. The dollar also hit a low for the year versus the Japanese yen.
"Confidence remains unusually weak and that the slowdown in the economic recovery that we always expected has begun," said Paul Dales, U.S. economist for Capital Economics.
Oil has traded around US$77 this week as mixed signals from second-quarter U.S. corporate earnings reports and economic indicators suggest an uneven recovery.
Crude traders often look to stock markets as a barometer of overall investor sentiment.
"Oil remains attached to equities for now and as a result, economic guidance should continue to rule," Ritterbusch and Associates said in a report.
Global oil consumption gains this year have been led by developing countries, especially China, the world's third-largest economy. China said Thursday its gross domestic product expanded by 10.3 percent in the second quarter from a year earlier, down from 11.9 percent growth in the first quarter.
"Chinese oil demand continues to scale new highs," Barclays Capital said in a report. "China remains the single largest contributor to global oil demand growth this year."
"Market fears of an imminent Chinese slowdown may be a bit overblown," it added.
In other Nymex trading, heating oil lost 0.7 cent to US$2.0113 a gallon, gasoline fell 1.21 cents to US$2.0486 a gallon and natural gas fell 6.7 cents to US$4.519 per 1,000 cubic feet.
In London, Brent crude fell 16 cents to US$75.37 a barrel on the ICE Futures exchange.
Benchmark crude for August delivery slid 61 cents to settle at US$76.01 a barrel on the New York Mercantile Exchange.
The Dow Jones industrial average fell about 260 points, or 2.5 percent, and other major market indexes also plunged, spurred by lackluster earnings and sluggish economic data.
Stocks fell further after a twice-monthly survey from the University of Michigan and Reuters found that consumers' gloom is increasing. An index of consumer sentiment compiled from the survey fell to 66.5 in early July from 76. That was a bigger drop than expected.
The reports overshadowed a decline in the U.S. dollar, which is usually bullish for crude because it makes oil cheaper for buyers that hold other currencies.
The euro rose yesterday to its highest level in two months, topping US$1.30 as worried investors shift their focus from the European debt crisis to slowing growth in the U.S. The dollar also hit a low for the year versus the Japanese yen.
"Confidence remains unusually weak and that the slowdown in the economic recovery that we always expected has begun," said Paul Dales, U.S. economist for Capital Economics.
Oil has traded around US$77 this week as mixed signals from second-quarter U.S. corporate earnings reports and economic indicators suggest an uneven recovery.
Crude traders often look to stock markets as a barometer of overall investor sentiment.
"Oil remains attached to equities for now and as a result, economic guidance should continue to rule," Ritterbusch and Associates said in a report.
Global oil consumption gains this year have been led by developing countries, especially China, the world's third-largest economy. China said Thursday its gross domestic product expanded by 10.3 percent in the second quarter from a year earlier, down from 11.9 percent growth in the first quarter.
"Chinese oil demand continues to scale new highs," Barclays Capital said in a report. "China remains the single largest contributor to global oil demand growth this year."
"Market fears of an imminent Chinese slowdown may be a bit overblown," it added.
In other Nymex trading, heating oil lost 0.7 cent to US$2.0113 a gallon, gasoline fell 1.21 cents to US$2.0486 a gallon and natural gas fell 6.7 cents to US$4.519 per 1,000 cubic feet.
In London, Brent crude fell 16 cents to US$75.37 a barrel on the ICE Futures exchange.
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