Oil prices slip on weak Japanese growth data

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World oil prices slid on Monday after news that the Japanese economy experienced a sharp slowdown in the second quarter of the year, fanning worries about weak energy demand.

New York's main contract, light sweet crude for delivery in September, dipped 17 cents to 75.22 dollars a barrel.

Brent North Sea crude for September dropped 27 cents to 74.84 dollars in late afternoon London trade, after earlier hitting a one-month low at 74.53 dollars.

"It was a slow start to the week, with crude oil prices remaining under 76 dollars per barrel, struggling for direction while investors wait for further signs from the global equity markets and the US macroeconomic data," said Sucden analyst Myrto Sokou.

"It seems that market participants remained cautious after the release of the Japanese figures while risk-aversion is back ... amid these uncertain economic conditions."

In Japan -- the world's third biggest oil consuming nation -- gross domestic product (GDP) grew by an annualised 0.4 percent in the three months to June, down from a revised 4.4 percent in the previous three months, data showed.

The GDP figure dashed market expectations for 2.3-percent growth.

Before the weekend, crude futures fell for the fourth consecutive day on Friday, amid stubborn concerns over the global economic recovery and despite upbeat growth data in Europe.

"Economic uncertainty continues to haunt the crude market, with rising concerns over the 2011 energy demand outlook, as downside risks to the ongoing economic recovery remain and plentiful crude stockpiles provide a handy supply cushion to secure from disruptions," VTB Capital's Andrey Kryuchenkov said.

Jitters over the US and Chinese economies, the world's top two energy-consuming nations, are also putting a dampener on oil prices, according to Tony Nunan, a risk manager with Mitsubishi Corp in Tokyo.

"The United States and China slowing down has got the markets a little concerned," he told AFP.

He added that the outlook for both economies was "less bullish than before" and was offsetting strong European economic data.

Global financial markets were also rattled last week after both the Bank of England and the US Federal Reserve downgraded their economic growth outlooks.

A surprise rise in the new US weekly jobless benefit claims added to increasing gloom over the strength of the global recovery from recession.


© 2010 AFP

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