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Oil settles below US$72
Source: Agencies |
July 7, 2010, Wednesday
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OIL prices reversed course and fell yesterday, as a morning stock market rally fizzled after an economic report predicted slowing growth in the U.S. economy.
Benchmark crude for August delivery fell 16 cents to settle at US$71.98 a barrel on the New York Mercantile Exchange after rising as high as US$73.86 earlier in the day.
The Institute for Supply Management, a trade group of purchasing executives, said its index of services companies fell to 53.8 last month from 55.4 in May. Economists polled by Thomson Reuters forecast 55.0 for June. A reading above 50 indicates growth.
The report missed expectations but still signaled that the U.S. economy is growing, albeit at a slower pace.
The Dow Jones Industrial Average rose 57.14 points to close at 9,743.62, after rising almost 200 points earlier in the session.
Some analysts are slashing oil price projections despite stronger crude demand in emerging economies. Barclays cut its forecast for the average oil price in the fourth quarter to US$87 a barrel from a previous estimate of US$92 and lowered its prediction for 2011 to US$92 from US$97.
Investor fears of a double-dip recession in Europe and the U.S. later this year have been weighing on stocks and commodities in recent weeks. A weaker than expected June jobs report on Friday added to concern the U.S. economic recovery could peter out once massive government spending stimulus ends.
A stronger-than-usual hurricane season forecast in the Gulf of Mexico this year may also provide a floor for oil markets.
Others are more optimistic.
"For the moment, despite the growth jitters, it seems to us that both the U.S. and the global recovery will remain intact, and although growth seems to have clearly downshifted a gear or two, we are not looking for a double-dip," MF Global analyst Edward Meir said. He added that he would be surprised if oil prices stayed below US$70 for a considerable period.
In other Nymex trading, heating oil rose 0.17 cent to settle at US$1.9172 a gallon, natural gas lost half a cent to settle at US$4.682 per 1,000 cubic feet and gasoline fell 0.64 cent to settle at US$1.9713 a gallon.
In London, Brent crude lost 2 cents to settle at US$71.45 a barrel on the ICE Futures exchange.
Benchmark crude for August delivery fell 16 cents to settle at US$71.98 a barrel on the New York Mercantile Exchange after rising as high as US$73.86 earlier in the day.
The Institute for Supply Management, a trade group of purchasing executives, said its index of services companies fell to 53.8 last month from 55.4 in May. Economists polled by Thomson Reuters forecast 55.0 for June. A reading above 50 indicates growth.
The report missed expectations but still signaled that the U.S. economy is growing, albeit at a slower pace.
The Dow Jones Industrial Average rose 57.14 points to close at 9,743.62, after rising almost 200 points earlier in the session.
Some analysts are slashing oil price projections despite stronger crude demand in emerging economies. Barclays cut its forecast for the average oil price in the fourth quarter to US$87 a barrel from a previous estimate of US$92 and lowered its prediction for 2011 to US$92 from US$97.
Investor fears of a double-dip recession in Europe and the U.S. later this year have been weighing on stocks and commodities in recent weeks. A weaker than expected June jobs report on Friday added to concern the U.S. economic recovery could peter out once massive government spending stimulus ends.
A stronger-than-usual hurricane season forecast in the Gulf of Mexico this year may also provide a floor for oil markets.
Others are more optimistic.
"For the moment, despite the growth jitters, it seems to us that both the U.S. and the global recovery will remain intact, and although growth seems to have clearly downshifted a gear or two, we are not looking for a double-dip," MF Global analyst Edward Meir said. He added that he would be surprised if oil prices stayed below US$70 for a considerable period.
In other Nymex trading, heating oil rose 0.17 cent to settle at US$1.9172 a gallon, natural gas lost half a cent to settle at US$4.682 per 1,000 cubic feet and gasoline fell 0.64 cent to settle at US$1.9713 a gallon.
In London, Brent crude lost 2 cents to settle at US$71.45 a barrel on the ICE Futures exchange.
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