Oil prices drop underneath 77 dollars

12th August 2010, Comments 0 comments

World oil prices dipped below 77 dollars on Thursday when trading was dampened by falling stock markets and persistent worries about the global economic outlook, analysts said.

Brent North Sea crude for delivery in September sank 86 cents to 76.78 dollars a barrel in early afternoon London trade.

New York's main contract, light sweet crude for delivery in September, dropped 77 cents to 77.25 dollars.

"Crude oil prices retreated for a third consecutive day to test the 77-dollars-per-barrel area ... amid continuing concerns over the fragile global economic recovery that could slow down the demand for oil and consequently push crude oil prices lower," said Sucden analyst Myrto Sokou.

Stock markets slid on Thursday as many investors ditched risky assets on mounting fears over the global economic recovery.

A fierce equities sell-off began Wednesday after the US Federal Reserve and the Bank of England cut their outlooks, while investors also shunned risk on signs of slowing industrial growth and rising inflation in China.

A sharp widening of the US trade deficit added to the gloom, triggering fears of a double-dip recession in the world's biggest energy-consuming nation.

"The energy market is back to the previous trading range of 70-80 dollars per barrel, as global uncertain conditions and fairly disappointing economic figures from the United States, eurozone and China weigh heavily on the market," added Sokou.

Oil had plunged on Wednesday, driven by tumbling equity markets, and despite falling US oil inventories and an upgrade in the International Energy Agency's global oil demand forecast for the year.

The US government reported that crude inventories fell by three million barrels last week to 355 million barrels.

At the same time, the IEA raised its estimate for world oil demand this year by 80,000 barrels per day, and for next year by 50,000, on the basis that the global economy grows 4.5 percent in 2010 and 4.3 percent in 2011.

The revised figures mean total demand this year would rise by 1.8 million barrels per day, or 2.2 percent, to 86.6 million.

Demand would then rise by 1.3 million barrels per day or 1.5 percent to 87.9 million next year, according to the IEA.

© 2010 AFP

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