Oil prices drop to $76 per barrel


MONDAY, 19 JULY 2010 


Oil prices sank on Friday at the end of a volatile week which saw dealers trying to get a fix on the energy demand outlook amid mixed data.New York’s main contract, light sweet crude for delivery in August, fell 61 cents on Friday to finish the week at $US76.01 a barrel.


London’s Brent North Sea crude for September fell 82 US cents to settle at $US75.37.”Some economic data in the United States are signalling slower economic growth and that has put a lid on any price rally,” said Victor Shum, an analyst with energy consultancy Purvin & Gertz.He said oil was likely to trade between $US70 and $US80 for some time.


“There is really no big driver to cause oil to break out of this range,” Shum added.Doubts about the strength of the US recovery were fuelled by economic reports on Friday.The University of Michigan’s consumer sentiment index dropped almost 10 points – far steeper than forecast – to 66.5 in July.”(The) consumer sentiment index nose-dived by 9.5 points in July to reach 66.5; this is the lowest level since August 2009,” said Chris Christopher of IHS Global Insight.


Earlier a government report showed inflation remained tame, in line with expectations as the fragile recovery helps curb price rises. The consumer price index fell for the third consecutive month in June, by 0.1 per cent, led by lower petrol prices.The strength of the economic rebound in the United States is being closely watched by investors because it consumes more energy than any other country.Oil prices fell on Thursday after indicators signalled slowing growth in both the United States and China, the world’s top energy-consuming nations.


Sentiment had been dampened late on Wednesday after the Federal Reserve said US growth figures were trimmed at a June meeting of its policy-setting   Federal Open Market Committee (FOMC).Meeting minutes showed that board members cut their growth forecast to 3.0-3.5 per cent this year from the 3.2-3.7 predicted just months ago, and that the Fed was weighing new measures to keep the faltering US recovery on track.


“Upwards oil price progress remains slow in the face of continuing weak sentiment and fears of economic tail-end outcomes,” Barclays analysts told clients.





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