Oil drops a 4th day on economic growth fears
New York, August 14, 2010
Crude oil prices fell a fourth straight day on Friday, dropping 6.6 per cent for the week, on mounting concerns about slowing economic growth that have weighed on equities and oil prices.
Friday's mixed data did not alleviate the concerns or provide much market cheer.
US retail sales rebounded in July but the gains were concentrated in autos and gasoline station sales and showed hints of lingering economic softness.
Consumer sentiment showed improvement in August, but as with the retail sales data, there were still signs people remain nervous about the near term.
Oil prices had already been pummeled earlier in the week by a jobless claims rise highlighting a fragile US employment sector after last week's disappointing July nonfarm payrolls report, and by rising refined fuel stockpiles punctuating tepid oil demand.
US crude for September delivery fell 35 cents to settle at $75.39 a barrel, trading from $75.01 to $76.74.
For the week, US crude lost $5.31, or 6.6 per cent, the biggest weekly per centage loss since the week to July 2, when prices ended down $6.72, or 8.52 per cent, with the market pressured by a weak June nonfarm payrolls on that Friday.
US September RBOB gasoline futures fell 1.52 cents to settle at $1.9396 a gallon on Friday. That was down 17.31 cents, or 8.19 per cent in the week, also the biggest weekly per centage loss since the week to July 2.
US heating oil futures fell 0.59 cent to settle at $1.9956 a gallon, down 15.16 cents, or 7 per cent, and also the biggest weekly percentage loss since the week to July 2.
Front-month ICE Brent crude also fell a fourth straight day on Friday, dropping 41 cents to settle at $75.11 a barrel.
"The whole week has been about poor economic data and today's releases show that the US consumer is still on the mend," said Harry Tchilinguirian, commodity strategist at BNP Paribas.
"Retail sales disappointed and if consumer confidence in August managed to come in a notch above expectations ... it still remains below the June reading."
The US dollar rose and headed for its strongest weekly performance against major currencies in almost two years as a lackluster Italian debt sale and tepid US consumer data fed slower growth fears. The euro fell to a three-week low against the dollar.
Earlier on Friday, strong euro zone economic data pushed oil prices up $1, before the rally by European stocks and the euro gave way. Euro zone gross domestic product grew at its fastest pace in more than three years in the second quarter, boosted by strong performances in Germany and France.
Opec demand view little changed
The Organisation of the Petroleum Exporting Countries said in a monthly report that oil demand growth would continue be slow in 2011, when world economic expansion is projected to be slightly lower than in 2010, leaving the current supply overhang intact.
And with US crude oil inventories remaining at a premium to year-ago levels, Opec members' production has been creeping higher. Members with output quotas -- all except Iraq -- produced 26.861 million barrels per day in July, 142,600 bpd more than in June. – Reuters