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Oil falls on euro zone debt crisis
Source: Agencies |
December 17, 2010, Friday
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OIL prices slid yesterday below US$88 a barrel on concerns about the euro zone debt woes which overshadowed another batch of positive economic news in the United States.
While European leaders debated how to counter the region's painful debt crisis, U.S. government agencies said fewer Americans applied for jobless benefits and housing starts rose slightly in November. That followed earlier reports that factory production and retail sales posted gains in November.
Benchmark oil for January delivery fell 92 cents to settle at US$87.70 a barrel on the New York Mercantile Exchange.
Michael Lynch, president of Strategic Energy & Economic Research, said traders are cautious because signs of the improving economy have been offset recently by occasional warnings about inflation as well as unemployment that remains at 9.8 percent.
Also, the dollar got a little stronger on yesterday, making oil more expensive for buyers with foreign currency.
Most global crude demand growth this year came from emerging economies, led by China. Some analysts expect Chinese demand for commodities will likely fade in coming years as the economy shifts toward services.
"Rebalancing of the economy over the next decade is likely to see commodity-intensity drop sharply and with it commodity demand," Capital Economics said in a report. "The prices of industrial commodities may already have risen to unsustainable levels."
In other Nymex trading, heating oil lost 0.72 cent to settle at US$2.4763 a gallon and gasoline gave up 0.49 cent to settle at US$2.3043 a gallon.
Natural gas for January delivery fell 17.4 cents to settle at US$4.048 per 1,000 cubic feet.
In London, Brent crude fell 49 cents to settle at US$91.71 a barrel on the ICE futures exchange.
While European leaders debated how to counter the region's painful debt crisis, U.S. government agencies said fewer Americans applied for jobless benefits and housing starts rose slightly in November. That followed earlier reports that factory production and retail sales posted gains in November.
Benchmark oil for January delivery fell 92 cents to settle at US$87.70 a barrel on the New York Mercantile Exchange.
Michael Lynch, president of Strategic Energy & Economic Research, said traders are cautious because signs of the improving economy have been offset recently by occasional warnings about inflation as well as unemployment that remains at 9.8 percent.
Also, the dollar got a little stronger on yesterday, making oil more expensive for buyers with foreign currency.
Most global crude demand growth this year came from emerging economies, led by China. Some analysts expect Chinese demand for commodities will likely fade in coming years as the economy shifts toward services.
"Rebalancing of the economy over the next decade is likely to see commodity-intensity drop sharply and with it commodity demand," Capital Economics said in a report. "The prices of industrial commodities may already have risen to unsustainable levels."
In other Nymex trading, heating oil lost 0.72 cent to settle at US$2.4763 a gallon and gasoline gave up 0.49 cent to settle at US$2.3043 a gallon.
Natural gas for January delivery fell 17.4 cents to settle at US$4.048 per 1,000 cubic feet.
In London, Brent crude fell 49 cents to settle at US$91.71 a barrel on the ICE futures exchange.
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