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Oil prices tumble on economy worries
Source: Agencies |
February 26, 2010, Friday
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OIL prices tumbled yesterday on new signs that the economy remains weak and that demand for crude is still tepid at best.
Benchmark crude for April delivery fell US$1.83 to settle at US$78.17 a barrel on the New York Mercantile Exchange.
Oil has been bouncing back and forth for months between US$70 and US$80 as investors watch economic data for clues about where the economy is heading following the Great Recession.
The signs yesterday were mostly negative as the government said new claims for unemployment benefits last week jumped unexpectedly while a separate report on big-ticket manufactured goods was mixed.
Crude prices rose Wednesday after Federal Reserve Chairman Ben Bernanke told Congress that he expects interest rates to stay low for a while to help boost the economy.
The economy has grown for six months but is not yet spurring hiring and unemployment remains stubbornly high. Couple that with more than ample supplies and signs that the economy still needs to be propped up by federal stimulus "means that the demand were expecting to see may not develop," said Phil Flynn of PFGBest.
Oil prices were also pushed down yesterday by a stronger dollar and a drop in the stock market.
Because crude is traded in dollars, it gets cheaper when the dollar climbs and forces investors holding other currencies such as the euro to pay more for oil. The dollar was near a nine-month high against the euro over worries about economic growth and debt problems in Europe.
Major stock averages were down about one percent around mid-afternoon.
A weekly report on natural gas supplies from the Energy Information Administration showed gas in storage shrank by 172 billion cubic feet last week, to 1.85 trillion cubic feet. That was in line with analysts' estimates, according to a survey by Platts, the energy information arm of McGraw-Hill Cos., and less than the 190 billion cubic feet draw the week before.
In other Nymex trading in March contracts, heating oil fell 5.59 cents to settle at US$1.9862 a gallon, and gasoline lost 6.19 cents to settle at at US$2.0370 a gallon. April natural gas prices were down 9.2 cents to US$4.767 per 1,000 cubic feet.
In London, Brent crude gave up US$1.80 to settle at US$76.29 on the ICE futures exchange.
Benchmark crude for April delivery fell US$1.83 to settle at US$78.17 a barrel on the New York Mercantile Exchange.
Oil has been bouncing back and forth for months between US$70 and US$80 as investors watch economic data for clues about where the economy is heading following the Great Recession.
The signs yesterday were mostly negative as the government said new claims for unemployment benefits last week jumped unexpectedly while a separate report on big-ticket manufactured goods was mixed.
Crude prices rose Wednesday after Federal Reserve Chairman Ben Bernanke told Congress that he expects interest rates to stay low for a while to help boost the economy.
The economy has grown for six months but is not yet spurring hiring and unemployment remains stubbornly high. Couple that with more than ample supplies and signs that the economy still needs to be propped up by federal stimulus "means that the demand were expecting to see may not develop," said Phil Flynn of PFGBest.
Oil prices were also pushed down yesterday by a stronger dollar and a drop in the stock market.
Because crude is traded in dollars, it gets cheaper when the dollar climbs and forces investors holding other currencies such as the euro to pay more for oil. The dollar was near a nine-month high against the euro over worries about economic growth and debt problems in Europe.
Major stock averages were down about one percent around mid-afternoon.
A weekly report on natural gas supplies from the Energy Information Administration showed gas in storage shrank by 172 billion cubic feet last week, to 1.85 trillion cubic feet. That was in line with analysts' estimates, according to a survey by Platts, the energy information arm of McGraw-Hill Cos., and less than the 190 billion cubic feet draw the week before.
In other Nymex trading in March contracts, heating oil fell 5.59 cents to settle at US$1.9862 a gallon, and gasoline lost 6.19 cents to settle at at US$2.0370 a gallon. April natural gas prices were down 9.2 cents to US$4.767 per 1,000 cubic feet.
In London, Brent crude gave up US$1.80 to settle at US$76.29 on the ICE futures exchange.
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