Oil near $78 amid global economic growth worries

Associated Press

SINGAPORE — Oil hovered at an eight-month low near $78 a barrel Friday in Asia after signs of slowing global economic growth triggered a sharp plunge in the oil price this week.

Benchmark oil for August delivery was down 7 cents to $78.13 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $3.25 to settle at $78.20, the lowest since October, in New York on Thursday.

In London, Brent crude for August delivery was up 33 cents at $89.56 per barrel on the ICE Futures exchange.

Crude fell from $84 earlier this week and has plummeted 26 percent in less than two months as signs mount of a slowdown in the global economy, led by Europe, that would reduce demand for crude.

Reports on Thursday that showed industrial production is slowing in the U.S. and China added to evidence that the world’s two largest economies and oil consumers are weakening just as global crude supplies are growing.

“Oil market sentiment remains extremely weak, with the chances of any immediate sustained relief rally appearing rather limited,” Barclays said in a report.

Europe’s debt and economic woes are unlikely to be solved soon. The formation of a new Greek government this week briefly boosted investor optimism, but doubts about other debt-ridden European countries such as Spain and Italy continue to weigh on markets.

In other energy trading, heating oil was down 0.2 cent at $2.52 per gallon while gasoline futures gained 1 cent at $2.46 per gallon. Natural gas gained 2.4 cents at $2.61 per 1,000 cubic feet.