Crude slips on demand worries despite weak dollar
CRUDE Oil slipped yesterday in choppy trading as weak economic data in Japan and the US fed worries about the energy demand outlook, outweighing support from a weaker dollar.
News that Japan's economy expanded by a mere 0.1pc in the second quarter, below forecasts, weighed on Asian equities and was followed later by weak US data.
A gauge of manufacturing in New York state rose in August but the reading was below expectations.
US home-builder sentiment unexpectedly fell in August for a third straight month to its lowest level in nearly 18 months, according to the National Association of Home Builders survey yesterday.
Separately, the New York Federal Reserve said its Empire State general business conditions index increased to 7.10 in August from 5.08 in July. But that was below the 8.00 expected by economists polled by Reuters.
Oil prices drew some support as the dollar index dropped, while the euro edged up against the greenback after slipping to a one-month low in Asian trading. US crude for September delivery fell 19c to $75.20 a barrel at 4pm. September crude traded as low as $74.86, the lowest since July 13 and off an early $75.95 peak.
Front-month ICE Brent crude fell 27c to $74.84 a barrel.
"Economic woes and weaker equities are weighing on the price," said Christopher Bellew, a broker at Bache Commodities. "Rather than completely collapsing, oil is probably likely to trade in a sideways pattern between around $74 and $78 basis Brent."
Wall Street also saw choppy trading, with the technology heavy Nasdaq leading a bargain hunter-led US equities bounce after a weak opening.
Investors have grown more pessimistic about the outlook for oil demand due to weak economic data and rising US fuel inventories, ample crude stocks and tepid demand. Last week, oil prices fell 6pc.
Rising gasoline stockpiles have sent US gasoline futures lower, and rising inventories also have pressured benchmark distillate heating oil futures. Both were below $2 a gallon.
Oil markets continued to eye tropical weather threats. Producers have not cut back oil and natural gas production in the northern Gulf of Mexico because of the brewing tropical weather threat, operating companies said yesterday.