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Oil prices drop below US$77 on economic doubt

OIL prices fell below US$77 a barrel yesterday on a stronger dollar and amid concern about the strength of the global economic recovery.

Benchmark crude gave up 74 cents to settle at US$76.72 a barrel on the last trading day for the December contract. Crude prices for January delivery lost 58 cents to settle at US$77.47.

Crude prices were dragged down by uncertainty about the economic outlook, including concerns about deflation and a possible double-dip recession.

Oil has seesawed between US$76 a barrel and US$82 for about a month as the dollar - whose fall this year has help boost crude prices from US$32 in December - stabilized somewhat during the last few weeks. Investors often buy commodities such as oil as a hedge against a weaker dollar and inflation.

Wall Street stocks dropped for a third straight day yesterday as investors grew increasingly uneasy about a rising dollar and spiking demand for the safest government debt.

A strengthening dollar curtails foreign demand for commodities, which are often traded in dollars. It also can depress U.S. exports, which become more expensive as the dollar rises.

On Thursday, the Labor Department said employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures. However, some analysts expect Asian economic growth, led by China, to help offset a sluggish recovery in developed countries.

In other Nymex trading, heating oil fell 2.08 cents to settle at US$1.9756 a gallon. Gasoline for December delivery added 1.11 cents to settle at US$1.9806 a gallon. Natural gas added 8.2 cents to settle at 4.424 cents per 1,000 cubic feet.

In London, Brent crude for December delivery fell 42 cents to US$77.22 on the ICE Futures exchange.


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