Oil prices slip on economic concerns

20th July 2010, Comments 0 comments

World oil prices slipped Tuesday as traders fretted over the weak energy demand outlook after poor company results and downbeat economic data in key energy consumer the United States.

New York's main contract, light sweet crude for delivery in August, shed four cents to 76.50 dollars a barrel.

Brent North Sea crude for September dipped 20 cents to 75.42 dollars in afternoon London trade.

Oil had rebounded Monday on bargain-hunting after recent falls but Wall Street sank Tuesday as poor results and fresh evidence of a sclerotic housing recovery hit investor sentiment.

The Dow Jones Industrial Average was down 0.85 percent to 10,069.06 points an hour after the opening bell.

"Market participants just can't shake nagging concerns that the economic trajectory in the second half is losing steam," said analysts at Briefing.com.

Investment giant Goldman Sachs on Tuesday said its profits fell 82 percent in the second quarter as revenues dropped 36 percent, troubling investors who had hoped it would do much better.

In addition, official data showed Tuesday that US housing starts plunged 5.0 percent in June, declining far more than expected as the home building industry reels in a fragile economic recovery.

Construction starts on privately owned homes fell to a seasonally adjusted annual rate of 549,000 in June, the second consecutive monthly decline and the slowest rate since October 2009, the Commerce Department said.

That was 5.0 percent below the May rate of 578,000, revised sharply downward from an initial estimate of 593,000. The average analyst forecast was for 575,000 housing starts.

Traders meanwhile awaited US earnings from other major companies including Apple, Morgan Stanley and Yahoo!

Later this week, markets will focus on Federal Reserve chairman Ben Bernanke's two-day Congressional testimony and the outcome of so-called "stress tests" on the health of European banks on Friday.

In Asian trade earlier Tuesday, the market enjoyed slight gains, riding a rebound from the previous session after a modest rise on Wall Street on Monday.

David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia, said oil prices would continue to trade within the 74 to 78 dollar range but could see "further volatility" in the near term.


© 2010 AFP

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