Oil falls to around $77 on economic growth worries
Oil fell to around $77 a barrel today, extending an earlier drop, pressured by data showing economic growth in top oil consumer the United States slowed in the second quarter.india Updated: Jul 30, 2010 19:33 IST
Oil fell to around $77 a barrel on Friday, extending an earlier drop, pressured by data showing economic growth in top oil consumer the United States slowed in the second quarter.
Gross domestic product expanded at a 2.4 percent annual rate, the Commerce Department said, after a revised 3.7 percent growth pace in the January March quarter. Analysts expected second quarter growth of 2.5 percent.
US September crude shed $1.26 to $77.10 a barrel at 1309 GMT. ICE Brent fell $1.14 to $76.45.
"Oil is coming down further after the data was published, probably on the fear out there of a double dip," said Daniel Briesemann, analyst at Commerzbank in Frankfurt.
The GDP report also pressured European equities and boosted gold. Wall Street was set to open lower and the dollar pared an earlier gain against a basket of currencies.
Oil was down earlier in the session as some investors anticipated a weak GDP report, and because of data earlier this week showing rising US inventories.
A US government report on Wednesday showed crude inventories jumped the most in almost two years last week, by more than 7 million barrels.
Industry group the American Petroleum Institute also reported a rise in stockpiles.
The slowdown in the US economic recovery was also flagged by a stream of weak economic data in the past couple of months.
Still, US crude on Thursday climbed almost 1.8 percent, the first gain of the week despite falling equities, boosted by a weaker dollar, which makes dollar denominated commodities cheaper for other currency holders.
Oil has traded in a range between $70 and $80 for almost two months. Prices are unlikely to move above $80 a barrel unless inventories fall, said Mark Pervan, a senior commodities analyst at ANZ in Melbourne.
Industrial output in Japan, the world's third largest oil user, unexpectedly fell in June and manufacturers expect further declines in coming months, boding ill for the fragile economic recovery.
Members of the Organization of the Petroleum Exporting Countries have said they prefer oil to remain around $70 to $80 a barrel, a level they say encourages investment to sustain and increase production capacity and does not put the global economic recovery at risk.
With prices staying within that range, OPEC production has been climbing steadily and has risen further in July, a Reuters survey showed on Thursday.