Oil falls to $80 as U.S. revises GDP down
NEW YORK (Reuters) - Oil prices fell below $80 a barrel on Friday after data showed the U.S. economy grew less than expected last quarter, and a plan to bail out Greece from a fiscal crisis failed to quell concern over fragile economic recovery.
"You had the GDP revised lower and there's still concern about the euro and the euro zone economy," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
The U.S. economy expanded at a 5.6 percent annual rate instead of the 5.9 percent originally estimated, the Commerce Department said in its final report for the fourth quarter, albeit still at the fastest pace in nearly seven years.
U.S. crude for May delivery settled at $80.00 per barrel, down 53 cents, reversing gains earlier in the day.
ICE Brent settled at $79.29, down 32 cents.
The euro rose from 10-month lows against the dollar after euro zone leaders agreed on a safety net for Greece, but the plan did not alleviate longer-term worries about fiscally vulnerable economies in the region.
U.S. consumer sentiment ended unchanged in March from February, with high unemployment and tougher credit standards hanging over the consumer, according to Thomson Reuters/University of Michigan's Surveys of Consumers.
News of the sinking of a South Korean navy ship also helped drive down prices, analysts said.
"There was also selling after news of the sinking of a South Korean naval vessel, which was seen with bearish implications on consumption and production," said Phil Flynn, an analyst with PFGBest Research in Chicago.
The U.S. economic data comes after a build up in crude stocks in the country, reported earlier this week, put pressure on oil prices.
"This week's hangover from the ... supply inflows is now acting as a background anchor on price action, despite the overnight bounce in the euro," said Mike Guido at Macquarie.
A weaker dollar often leads crude prices higher, in part by making oil priced in dollars cheaper for holders of other currencies.
Carsten Fritsch at Commerzbank said financial investors were stepping into the market around $80 as they bet on a rise in demand led by Asia, supported by tentative signs of recovery in the United States. <EIA/S>
Fritsch said the fundamental oil supply and demand picture remains weak.
"There's still a risk of a large oversupply in the second quarter leading to a further build in stocks," he said, given a rise in U.S. crude oil inventories and signs that OPEC pumped even more oil in the four weeks to April 10.
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