WSJ: OIL FUTURES Nymex Crude Down As Data Show Slowing Growth
By Jerry A. DiColo Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures fell Thursday following a new round of data that signaled slowing economic growth.
Light, sweet crude for August delivery recently traded $1.52, or 2%, lower at $75.52 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.28, or 1.7%, lower at $75.49 a barrel.
Futures began to drop shortly after making another attempt to broach the top of a trading range between $70 and $80 a barrel that's constrained the market for two months. The market was unable to hold onto recent gains after the Federal Reserve Bank of New York reported reduced growth in regional manufacturing activity, while U.S. industrial production rose only 0.1% in June, according to the Federal Reserve.
China, the second-biggest oil consumer after the U.S., also reported reduced growth, with the country's second-quarter gross domestic product rising 10.3% from last year, down from 11.9% expansion in the first quarter.
"It's not a pretty picture," said Walter Zimmerman, chief technical analyst at United-ICAP. "We are not optimistic for the upside here."
While oil prices have risen over the last few sessions, investors hadn't entirely shaken their uncertainty about the pace of global economic growth, which will help determine future oil demand.
Goldman Sachs lowered its outlook on oil for the second-half of the year to $87 a barrel, from an earlier forecast of $93 to $96 a barrel, due to high oil inventories and "still-fragile sentiment in the market."
Equities, another market tied to investor sentiment about the economy, were also down Thursday, with the Dow Jones Industrial Average recently off 1.2% at 10247.
However, major economies still appear to be pulling out of last year's downturn, which should keep a floor under oil prices, analysts said.
"Whether it's slow growth or no growth, as long as it's not declining, growth is growth," said Carl Larry, an analyst with Oil Outlooks and Opinions.
Front-month August reformulated gasoline blendstock, or RBOB, recently traded 3.61 cents, or 1.8%, lower at $2.0304 a barrel. August heating oil traded 3.91 cents, or 1.9%, lower at $1.9970 a gallon.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com.
