Oil falls again, sheds nearly $1
Crude prices keep falling on weak readings of U.S. economy.
Last Updated: August 1, 2008: 7:29 AM EDT
(AP) -- Oil prices extended losses from a day earlier Friday in Asia on expectations that slowing economic growth in developed countries will cut demand for crude products, such as gasoline and heating oil.
"The market is selling off because of the weak economic numbers out of the U.S.," said Tetsu Emori, commodity markets fund manager at ASTMAX Futures Co. in Tokyo. "Growth and oil demand is slowing in the U.S., Europe and Japan, and it's too optimistic to think emerging market demand will compensate for that."
Light, sweet crude for September delivery fell 94 cents to $123.14 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract lost $2.69 overnight to settle at $124.08 a barrel.
The U.S. Commerce Department said Thursday that country's gross domestic product rose just 1.9% in the second quarter despite government tax rebates aimed at boosting the economy. Economists had expected growth of 2.4%. The weak 1% GDP figure of the first three months of 2008 was also modified lower to 0.9%.
Meanwhile, a Labor Department report said Thursday the number of people seeking jobless benefits rose to the highest level in five years.
Easing American pump prices are further evidence of waning consumption of gasoline. The average price of a gallon of regular slipped 1.7 cents to $3.909, according auto club AAA, the Oil Price Information Service and Wright Express.
Nymex oil prices have dropped off around $23 a barrel since reaching a record high of $147.27 on July 11.
"Prices will likely correct over the next six months to the $100 to $110 range," Emori said. "There aren't enough fundamental factors right now pushing prices higher."
Prices fell despite no progress toward resolving the tension over Iran's nuclear program. Only days remain until a deadline expires for Tehran to show it will stop expanding its uranium enrichment program, at least temporarily, or face the threat of new U.N. sanctions.
Earlier this week, Iranian officials, including supreme leader Ayatollah Ali Khamenei, pledged to continue the country's nuclear program.
In other Nymex trading, heating oil futures fell 1.93 cents to $3.44 a gallon while gasoline prices fell 1.42 cents to $3.0567 a gallon. Natural gas futures fell 0.9 cent to $9.11 per 1,000 cubic feet.
http://money.cnn.com/2008/08/01/markets/oil.ap/index.htm?postversion=2008080107
