Oil slides for 3rd day on economic concerns

NEW YORK Fri Aug 20, 2010 4:19pm EDT

Motorists are shown at gas pumps at a Chevron gasoline station in Burbank, California July 31, 2009. REUTERS/Fred Prouser

Motorists are shown at gas pumps at a Chevron gasoline station in Burbank, California July 31, 2009.

Credit: Reuters/Fred Prouser

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NEW YORK (Reuters) - Oil prices fell a third straight day on Friday, tumbling to a six-week low and logging a second consecutive losing week as dismal economic data and bulging U.S. oil inventories kept investors worried about the economy and the outlook for oil demand.

Concerns about the economy also revived risk aversion, strengthening the dollar and pressuring the euro.

U.S. crude for September fell 97 cents, or 1.3 percent, to settle at $73.46 a barrel as the contract expired and went off the board. Front-month crude prices fell as low as $73.19 intraday, the lowest since July 7. For the week, crude futures lost $1.93, or 2.56 percent.

The new front-month October crude contract fell 95 cents, or 1.27 percent, to settle at $73.82 a barrel.

The front-month ICE October Brent contract fell $1.04 to settle at $74.26.

"(T)here were no surprises in today's trade as bullish speculative positions continue to be unwound amid a big contraction in economic optimism," Jim Ritterbusch, president at Ritterbusch & Associates, said in a research note.

ECONOMIC WOES

Investors shed stocks in favor of safe-haven assets such as U.S. Treasury debt and the U.S. dollar on mounting concerns about global economy.

A stronger dollar can pressure oil prices as money shifts out of riskier commodities and also because countries using other currencies must pay more for dollar-denominated oil.

Adding to economic jitters, a measure of future U.S. economic growth fell to a three-week low in the latest week, the Economic Cycle Research Institute said.

The ECRI report followed Thursday's data showing U.S. jobless claims rose to a nine-month high last week and mid-Atlantic manufacturing shrank in August.

Oil prices had already been pressured by Wednesday's U.S. Energy Information Administration report that showed combined U.S. crude and refined products rose to 1.130 billion barrels in the week to August 13 -- the highest level since the government began tracking weekly levels in 1990.

Money managers cut net long crude oil positions on the New York Mercantile Exchange in the week to August 17, according to data released by the Commodity Futures Trading Commission on Friday after oil prices settled.

RANGEBOUND TRADE

Oil prices have fallen by more than 10 percent from the August 4 high of $82.97 a barrel, returning to the $70-$80 range they have been mostly confined in since last October.

Oil prices received no lift from a report from industry group American Petroleum Institute that U.S. demand for crude oil and petroleum products rose 3.8 percent in July from the year-ago period, though the report did peg gasoline demand at virtually unchanged.

The oil market also shrugged off a potential tropical weather threat brewing in the Atlantic. A low pressure system southwest of the Cape Verde Islands was given a 40 percent chance of developing into a tropical depression over the next 48 hours, the U.S. National Hurricane Center said Friday.

Various private computer weather models on Friday projected the system would turn north before threatening the Gulf of Mexico.

(Additional reporting by Gene Ramos in New York, Emma Farge in London and Alejandro Barbajosa in Singapore; Editing by David Gregorio)

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Comments (3)
vinster888 wrote:
good for the consumers, not the gamblers.

Aug 20, 2010 2:26pm EDT  --  Report as abuse
cashman57 wrote:
I note with interest that the demand is flat for fuels.
The cost of crude is pegged to the health of our economy and when we are booming demand increases. Since we are in the worst economic shape since the last great depression it is unlikely we will see much increase in demand. Once the summer is over and tourism and travel falls off we could expect to see demand fall and prices fall as well.
We hear from the obama administration that we need to get off of foreign oil but the obama administration bought the patent for turning plant waste into crude and has effectively stopped the production on that avenue. The obama administration has yet to approve any new refineries which make us more dependent of foreign refiners. The obama administration has refused to grant permission for the oil shale conversion in Western Colorado which has more than a trillion barrels of easily refined crude.
The worst thing to happen to our economy was the election of Democrats in a majority in ‘06 and the selection and installation of the least qualified individual to ever darken the doorstep of 1600 Penn. Ave.

Aug 21, 2010 7:52am EDT  --  Report as abuse
persch wrote:
Absolutely right cashman57!

Aug 22, 2010 6:41pm EDT  --  Report as abuse
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