WSJ:OIL FUTURES: Crude Falls To Week-Low As Equity Selloff Continues
By Gurdeep Singh
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Crude-oil futures fell by more than 2% in Asia Friday, continuing an overnight selloff tracking weak equities and a stronger U.S. dollar.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $81.00 a barrel at 0652 GMT, down $1.38 in the Globex electronic session. October Brent crude on London's ICE Futures exchange fell $0.99 to $106.00 a barrel.
Nymex crude hit $80.38 intraday, down 2.4% and at its lowest level since Aug. 10, while stock market investors dumped regional equities following a rout on Wall Street Thursday. Australia's S&P/ASX 200 fell 2.7%, Japan's Nikkei Stock Average was down 1.9%, and South Korea's Kospi Composite lost 5.0%. Hong Kong's Hang Seng Index shed 2.4%, India's Sensex declined 1.4% and the Shanghai Composite Index was down 1.3%.
Concerns over the euro-zone debt crisis and fears of an economic slowdown in the U.S. prompted investors to flee riskier assets like oil toward safe-haven bets, including gold and the Japanese yen, with spot gold hitting a new record of $1,853.48 a troy ounce.
While crude was already under pressure over the European sovereign debt crisis, prices plummeted by nearly 6% overnight after bearish U.S. economic data. Losses piled up after a survey from the Philadelphia Federal Reserve showed manufacturing activity contracted sharply in August, suggesting that energy usage by manufacturers and other industries could slump as they brace for a weakening economy.
Investment bank Goldman Sachs said that while the Philadelphia Fed Index's drop to -30.7 in August would typically be indicative of a U.S. economic recession, and does point to "downside risks to our forecasts, the oil market data continues to show no sign of recession," Goldman Sachs said in a research note.
The investment bank said U.S. oil demand over the past three weeks has risen to the highest levels for this time of year since before the financial crisis, and the oil market supply-demand balance remains firm, signalling prices may follow an upward trajectory going into 2012.
Nymex reformulated gasoline blendstock for September--the benchmark gasoline contract--fell 146 points to $2.7686 a gallon, while September heating oil traded at $2.8580, 168 points lower.
ICE gasoil for September changed hands at $902.25 a metric ton, down $9.25 from Thursday's settlement.
-By Gurdeep Singh, Dow Jones Newswires; 65-6415 4064; gurdeep.singh@dowjones.com
