Oil down near $91 amid grim U.S., EU economy outlook
Oil prices fell to near $91 a barrel Thursday as investors continued to fret over the global economic recovery.
By early afternoon in Europe, benchmark oil for September delivery was down 88 cents to $91.05 a barrel in electronic trading on the New York Mercantile Exchange. Crude dropped $1.86 to settle at $91.93 on Wednesday.
In London, Brent crude was down $1.44 at $111.79 a barrel on the ICE Futures exchange.
Crude has dropped from near $100 a barrel two weeks ago following a raft of disappointing U.S. economic news. The main event of the week, at least in terms of perceptions over the U.S. recovery, will come Friday when the government publishes the July nonfarm payrolls data. Economists expect that 90,000 jobs were created in the U.S. last month, and that the unemployment rate was unchanged at 9.2 percent.
Traders are also concerned about Europe's sovereign debt crisis and its possible negative impact on economic growth and crude demand.
Mike Fitzpatrick, editor of the Kilduff Report, said the lack of "substantial measures by U.S. and European lawmakers to address the growing debt crisis," was "shaking the confidence of investors and consumers alike."
European Commission President Jose Manuel Barroso urged leaders of the 17-country eurozone to make further changes to its bailout fund — including boosting its size — to ensure it can effectively stem the worsening debt crisis
"The main impetus behind further expected weakening in oil is an evolving deterioration in both the European and U.S. economies," energy consultant Ritterbusch and Associates said in a report. "A bad employment number is capable of carrying oil toward the $90 area."
A stronger dollar also weighed on oil prices by making crude more expensive for investors holding other currencies.
The euro fell to $1.4239 from $1.4365 on the EU's debt worries, while the Bank of Japan's intervention in the markets to reduce the value of the yen has worked, at least in the short-term. The dollar was up at 79.80 yen on Thursday from 76.99 yen late Wednesday.
"The U.S. dollar continues to remain fairly strong against the euro and the yen, adding further pressure to an already struggling oil market.," said an energy report from Sucden Financial in London.
In other Nymex trading in September contracts, heating oil fell 2.08 cents to $2.9981 a gallon while gasoline dropped 3.84 cents to $2.8929 a gallon. Natural gas futures rose 1 cent to $4.10 per 1,000 cubic feet.