Crude oil prices shed two and a half dollars

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Oil prices fell heavily on Tuesday, mirroring a slump in equities, as traders fretted about weak consumer confidence in key energy consuming nation the United States, analysts said.

New York's main contract, light sweet crude for delivery in August, shed 2.64 dollars to 75.61 dollars a barrel.

Brent North Sea crude for August tumbled 2.50 dollars to 75.09 dollars per barrel in late afternoon London trade, after briefly falling under 75 for the first time since June 15.

Oil had also fallen earlier Tuesday on fears over China's economic growth following a major downgrade to a key economic indicator tracking the rapidly growing economy.

The Conference Board, a US business research firm, revised the April Leading Economic Indicator for China to 0.3 percent from 1.7 percent.

And later Tuesday, the board then announced that US consumer confidence had tumbled in June after three straight monthly rises amid increasing US economic uncertainty and unemployment concerns.

The Conference Board's Consumer Confidence Index declined sharply to 52.9 points from 62.7 in May. Most economists had expected the index to be at 62.0 in June.

New York's Dow stock index slumped more than two percent Tuesday as investors turned cautious on news of the sagging American consumer confidence combined with weak Chinese economic indicators.

They renewed fears the global economic recovery may falter with a double-dip recession in the United States, which is the biggest global energy consumer, followed by number two China.

The US economy started growing again in the middle of last year after a recession that struck in December 2007 but high unemployment, only modest wage growth and the credit crunch has put household finances under pressure.

Meanwhile, other data suggested the outlook for Japan's economy is weak after unemployment rose unexpectedly in May, while factory output declined and household consumption fell.

Oil prices also retreated on Tuesday as concerns eased over the possibility of a tropical storm in the Gulf of Mexico disrupting supplies.

"It looks like the storm missed the main oil-producing areas in the Gulf and as a result, some of the strength that's been a factor in moving prices is no longer there," said National Australia Bank analyst Ben Westmore.

With production on average of 1.7 million barrels of crude oil per day, the Gulf of Mexico accounts for more than 30 percent of oil output in the US, the world's biggest energy-consuming nation.


© 2010 AFP

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