Oil prices dip before weekly US report

LONDON - Oil prices fell under 66 dollars on Wednesday as traders mulled sliding US consumer confidence and awaited an update on crude stockpiles in the world’s biggest energy consuming nation.

By (AFP)

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Published: Wed 29 Jul 2009, 6:08 PM

Last updated: Sun 5 Apr 2015, 10:32 PM

New York’s main contract, light sweet crude for September, sank 1.69 dollars to 65.54 dollars.

London’s Brent North Sea crude for September delivery fell 1.26 dollars to 68.62 dollars a barrel.

Oil sank on Tuesday after a Conference Board report showed that US consumer confidence fell for a second straight month in July on worries about the job market.

The business research firm said its confidence index fell to 46.6 from 49.3 in June, which came after an eight-month peak of 54.8 in May. The July figure was weaker than analyst expectations of 49.0.

‘The lesson to be learnt from yesterday’s performance is to never underestimate the sentiment of the US consumer,’ said analyst Tamas Varga at PVM Oil Associates.

‘There are more than 300 million of them and they are the most affluent in the world, so when their mood sours, markets are bound to take a beating.’

Later Wednesday, traders will focus on the weekly energy inventories statistics due for release from the US government’s Department of Energy (DoE).

Crude oil inventories are forecast to drop by 400,000 barrels in the week ending July 24, according to analysts polled by Dow Jones Newswires. That would be the eighth successive weekly decline.

US gasoline reserves are also predicted to fall 400,000 barrels while distillates, which include heating oil and diesel, are expected to rise by 500,000 barrels.

The oil market was also pulled lower by the falling Chinese stock market, analysts said. China is the world’s second biggest energy consumer after the United States.

‘Crude futures are lower after a sharp fall in Chinese equities,’ said Sucden analyst Nimit Khamar.

Chinese shares slumped 5.00 percent on Wednesday as investors collected profits across the market after recent gains, with property developers leading the fall, dealers said.

‘The largest fall in eight months sapped risk appetite and sparked concerns over the sustainability of markets at current levels, especially oil markets,’ he added.

British energy giant BP’s 53-percent slump in second-quarter net profit was another drag on crude prices, with chief executive Tony Hayward predicting on Tuesday that energy demand would remain sluggish.

‘The overall picture is of energy demand now stabilising following significant falls in the first half of the year,’ Hayward said.

But he added: ‘We see little evidence of any growth in demand and expect the recovery to be long and drawn out.’

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