Oil Dips Near $75 on Weak Economic Data
Oil tumbled below $76 per barrel Friday, dragged down as disappointing U.S. economic data helped send stock markets down again.
U.S. light, sweet crude (delayed) for September delivery slipped as much as $1.72 to $75.14 per barrel by late Friday afternoon on the New York Mercantile Exchange. It had hit a record $78.77 on Wednesday.
London Brent crude (delayed) for September lost $1.01 to settle at $74.75 per barrel on the ICE Futures exchange in the U.K. capital.
U.S. stocks fell Friday after a report showing weaker-than-expected job growth last month was followed by a report of slowing service-sector growth, rattling investors already nervous about losses in the mortgage industry.
Concerns about mortgage losses intensified after Bear Stearns' chief financial officer said fixed-income market turmoil was worse than the Internet bubble.
"Crude futures are down as the stock markets are selling off a little bit because the latest U.S. unemployment numbers are weaker than expected," said Phil Flynn, analyst at Alaron Trading. "It's Friday and people are also taking a little profit from the recent highs."
The losses came as Colorado State University trimmed its forecast for the 2007 Atlantic storm season on Friday and predicted 15 tropical storms, with eight growing to hurricane strength, including four major hurricanes.
The updated forecast was lower than the team's May 31 forecast for the six-month storm season that runs through Nov. 30. The earlier forecast had predicted 17 tropical storms, nine hurricanes and five major hurricanes.
The formation of Atlantic storms this week reminded traders of the approaching peak of the hurricane season, but a tropical wave in the eastern Caribbean now appears less likely to become a cyclone.
Prices have been supported this week by comments from OPEC officials who said the producer group would not increase output when it next meets in September. Some analysts have forecast prices could spike as high as $95 a barrel later this year unless OPEC opens the taps.
Top consumer the United States is worried that as refiners returning from outages ramp up runs, crude stocks will drain rapidly and tighten supplies.
U.S. Energy Secretary Sam Bodman Thursday warned that oil prices have placed the world's largest economy in a "danger zone" and urged OPEC to raise output.
"People are concerned about overall crude and product stocks globally, as demand's still strong," said Gerard Rigby of Fuel First Consulting in Sydney.
OPEC officials are also concerned by oil at $80, but with U.S. crude inventories still well above historical norms the group is hesitant to increase output.
Qatari Oil Minister Abdullah al-Attiyah said OPEC can do nothing about high prices as there was no shortage of crude.