Wednesday, August 11, 2010

Crude Oil Futures Tumble as Demand Outlook Dims, China Manufacturing Slows

Crude oil fell for a second day on signals that economic growth in the U.S. and China, the world’s biggest energy consuming countries, is slowing. Oil slipped as much as 2.9 percent after China’s industrial output grew by the least in 11 months and the Federal Reserve said the U.S. recovery is decelerating. Futures extended declines after the U.S. Energy Department reported that fuel supplies climbed last week.

“The Chinese economy is showing signs of weakness and the picture here is worsening,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The economic picture isn’t rosy. The question now is where we will find support as we move south.” Crude oil for September delivery fell $2.10, or 2.6 percent, to $78.15 a barrel at 11:39 a.m. on the New York Mercantile Exchange. Futures touched $77.90, the lowest level since July 30. Brent crude oil for September settlement slipped $1.93, or 2.4 percent, to $77.67 a barrel on the London based ICE Futures Europe Exchange.

China’s year-on-year industrial production growth slowed to 13.4 percent in July, the statistics bureau said in Beijing today. In June, the increase was 13.7 percent. July’s gain was the smallest since August last year after excluding distortions caused by holidays at the start of each year. “The markets are once again responding to negative economic news from China,” said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc. in New York. “Chinese industrial output isn’t growing as fast and the retail sales numbers were disappointing”.....Read the entire article.

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