NEW YORK (Reuters) - Oil slipped below $76 a barrel on Friday dropping alongside equities markets as weak U.S. consumer sentiment and falling consumer prices lowered investor appetite for risk.
Data released on Friday showed U.S. consumer prices fell for a third straight month while consumer sentiment tumbled to an 11-month low, helping push down both oil and equities.
Falling consumer prices can be a sign that an economy is in deceleration, which would reduce demand for oil. Low consumer sentiment implies less consumer demand for goods and services, which would likewise hurt oil demand.
U.S. crude for August fell 90 cents to $75.72 a barrel by 11:25 a.m. EDT, after touching an intra-day high of $77.15.
London Brent’s new front-month September crude oil futures contract was down 86 cents to $75.23.
“It’s really the demand side story that is driving the-day-to day price swings,” said Tim Evans, energy analyst for Citi Futures Perspective. “The thing that is directing traffic here for the oil market is whether the S&P is up or down.”
Oil was on track to log a modest weekly decline from the week of July 9, when oil settled up 5.5 percent to $76.09.
The S&P 500 and the Dow Jones industrial average were both down close to 2 percent in morning trading, spurred by lackluster earnings and the sluggish economic data.
That data overshadowed a decline in the U.S. dollar, which is usually bullish for crude because it makes oil cheaper for buyers that hold other currencies.
Traders also shrugged off a U.S. National Hurricane Center statement that an oceanic weather system in the central Caribbean had a 10 percent chance of strengthening into a tropical cyclone over the next two days.
It was days away from potentially entering the oil-rich Gulf of Mexico.
U.S. crude prices have traded in a range between $71 and $80 a barrel for almost six weeks as volatility related to the European debt crisis dwindled. This week they have found support near the $75 per barrel range.
“Near-term crude fundamentals continue to look supportive as refinery runs remain on the rise, particularly in Asia following seasonal maintenance,” said J.P. Morgan in a research note.
Over the year, prices have stayed within a $23 span, hitting a 19-month peak above $87 and a trough below $65, both in May.
Additional reporting by Robert Gibbons in New York, David Turner and Joe Brock in London and Alejandro Barbajosa in Singapore; Editing by Alden Bentley
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