Oil prices drop as economy still looks shaky
NEW YORK, United States — SOME of the economic news was a little better yesterday, but it was not enough to keep oil prices from dropping again.
Benchmark crude for October delivery lost US$2.78 to settle at US$71.92 a barrel on the New York Mercantile Exchange.
The Conference Board said its Consumer Confidence Index now stands at 53.5, up from 51.0 in July. Still, consumer confidence is far below the 90 reading that would indicate a healthy economy.
In addition, the Standard & Poor’s/Case-Shiller 20-city home price index rose one per cent in June from May and 4.2 per cent from a year ago. However, home prices are expected to fall for the rest of the year.
Stocks fell yesterday afternoon after release of the Fed’s August meeting minutes, which showed the central bank would consider more measures to boost the US economy, if a programme to buy government debt didn’t work. The Dow Jones Industrial Average was about 10 points lower. The Nasdaq and the S&P 500 down a little as well. Traders have kept an eye on stocks for signs about the direction of the economic recovery.
“Oil continues to spend much of its time trailing the stock market,” analysts at Ritterbusch and Associates said in a report.
Many traders are awaiting August’s unemployment data, due Friday, to get a better handle on the economy as well.
“Every bit of news will bump the market in one or the other direction,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
Energy prices also pulled back after forecasters said Hurricane Earl turned toward the East Coast of the US and away from oil and gas operations in the Gulf of Mexico. Big storms rolling through the Gulf can interrupt production and raise prices.
“Some of that premium is being taken out of the market,” Lind-Waldock senior market analyst Rich Ilczyszyn said.
The Energy Department releases its weekly report on petroleum supplies today.
