Crude falls for third day as doubts grow about recovery
Crude oil fell, extending its biggest drop in six months, as equities and the euro slumped on concern that the economic recovery may falter.
Oil declined for a third day to trade below $73 a barrel as the dollar’s gains against the euro dulled crude’s appeal for hedging against inflation.
An increase in US jobless claims reported yesterday and growing concern over European sovereign debt sent stock markets falling around the world.
“Negative news about future economic growth prospects makes a huge impact on market sentiment and thereby risk appetite in the market,” said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo.
“We need to see more stable growth before the market turns its focus from demand worries and back to the future challenge of capacity constraints.”
Crude oil for March delivery declined as much as 68 cents, or 0.9pc, to $72.46 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.63 as of 10:09am.
Yesterday, the contract declined $3.84, or 5pc, to $73.14 a barrel, the biggest drop since July 29. Prices are little changed from the end of last week.
European Central Bank President Jean-Claude Trichet said yesterday the economic outlook is subject to “uncertainty.”
The euro has lost 4pc this year against the dollar on concern Greece and other so-called peripheral nations will face increasing difficulty in curbing budget deficits that are in excess of European Union limits.