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Oil rally fizzles, drops below US$80 a barrel
Source: Agencies |
February 24, 2010, Wednesday
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OIL and other energy prices sank yesterday after job worries sent a monthly measurement of consumer confidence sharply lower.
The Conference Board said its Consumer Confidence Index for February fell much more than expected as Americans became increasingly discouraged about job opportunities. Stocks and energy commodities dropped following the report.
Benchmark crude for April delivery lost US$1.45 to settle at US$78.86 a barrel on the New York Mercantile Exchange. In London, Brent crude fell US$1.36 to settle at US$77.25 a barrel on the ICE futures exchange.
Oil prices had been rising for more than two weeks as a steady drumbeat of reports suggested that manufacturing, home building and other pillars of the American economy were improving. But the U.S. continues to struggle with high unemployment, and a slump in consumer confidence may lead to another summer in which Americans cut back on travel.
The Board's index, based on a survey of U.S. households, fell almost 11 points to 46 for February, down from a revised 56.5 in January. A reading above 90 means the economy is on solid ground.
Meanwhile, investors were looking past a French refinery strike that had helped push global energy prices higher. That country may suffer some gasoline shortages, but the situation won't last long enough to seriously affect supplies, analyst Phil Flynn said.
"The world really isn't in want of oil products right now," he said. "The U.S. has enough of a surplus to make up for any shortages in France."
By late yesterday, protest leaders said they favored suspending the strike after meeting with Total officials in Paris.
The dollar also moved higher against the euro on a report that showed that Germany, Europe's biggest economy, continues to struggle to overcome the recession.
Because crude is traded in dollars, it becomes less expensive when the dollar rises and forces investors holding other currencies like the euro to pay more for the same amount of oil.
In other Nymex trading in March contracts, heating oil fell 4.65 cents to settle at US$2.0323 a gallon, while gasoline lost 5.02 cents to settle at US$2.0656 a gallon. Natural gas dropped 11.7 cents to settle at US$4.778 per 1,000 cubic feet.
The Conference Board said its Consumer Confidence Index for February fell much more than expected as Americans became increasingly discouraged about job opportunities. Stocks and energy commodities dropped following the report.
Benchmark crude for April delivery lost US$1.45 to settle at US$78.86 a barrel on the New York Mercantile Exchange. In London, Brent crude fell US$1.36 to settle at US$77.25 a barrel on the ICE futures exchange.
Oil prices had been rising for more than two weeks as a steady drumbeat of reports suggested that manufacturing, home building and other pillars of the American economy were improving. But the U.S. continues to struggle with high unemployment, and a slump in consumer confidence may lead to another summer in which Americans cut back on travel.
The Board's index, based on a survey of U.S. households, fell almost 11 points to 46 for February, down from a revised 56.5 in January. A reading above 90 means the economy is on solid ground.
Meanwhile, investors were looking past a French refinery strike that had helped push global energy prices higher. That country may suffer some gasoline shortages, but the situation won't last long enough to seriously affect supplies, analyst Phil Flynn said.
"The world really isn't in want of oil products right now," he said. "The U.S. has enough of a surplus to make up for any shortages in France."
By late yesterday, protest leaders said they favored suspending the strike after meeting with Total officials in Paris.
The dollar also moved higher against the euro on a report that showed that Germany, Europe's biggest economy, continues to struggle to overcome the recession.
Because crude is traded in dollars, it becomes less expensive when the dollar rises and forces investors holding other currencies like the euro to pay more for the same amount of oil.
In other Nymex trading in March contracts, heating oil fell 4.65 cents to settle at US$2.0323 a gallon, while gasoline lost 5.02 cents to settle at US$2.0656 a gallon. Natural gas dropped 11.7 cents to settle at US$4.778 per 1,000 cubic feet.
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