Oil prices slip as investors wrongfooted by faltering recovery
OIL prices slipped yesterday, pulled down by investor unease about stalled economic recovery and a slightly stronger dollar -- after oil posted three straight higher settlements to end the week.
US oil inventories near record highs, and lacklustre demand amid persistent unemployment, kept oil prices hemmed in after receiving some lift on Friday from Fed chairman Ben Bernanke's speech saying that the central bank is ready to act to bolster a faltering economic recovery.
The dollar index, measuring the greenback against a basket of currencies, was slightly stronger and the euro was weaker versus the dollar.
A stronger dollar can pressure crude prices because countries using other currencies must pay more for dollar-denominated oil and the currency producers are paid gains value. US crude for October delivery fell 44 cents, or 0.59pc, to $74.73 (€59) a barrel by lunchtime, having traded from $74.17 to $75.58.
Prices last Wednesday fell to a $70.76 a barrel intraday low, the weakest front-month crude price since the $70.75 low struck on June 8. Yesterday, ICE Brent for October dipped only 6 cents to $76.59 a barrel.
"We rallied last week when crude was oversold technically and the factors that drove prices down below $71 are still there. The fundamental picture is still weak, with inventories near record levels and lacklustre demand," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Global equities wavered on scepticism that governments can cushion stalled global growth.
US stocks edged lower yesterday on sagging confidence about the economy and investor caution ahead of several key reports coming this week.
Investors eyed a speech on the economy President Barack Obama was set to give yesterday and data due this week on manufacturing and services before Friday's closely watched report on August non-farm payrolls.
Neither oil nor equities markets garnered much support from news that US consumer spending rose in July at the strongest pace in four months.