Oil prices fell this afternoon after a batch of lacklustre economic reports signalled that the recovery in the US is running out of steam.
Crude oil futures jumped yesterday morning following an 11th hour deal between US lawmakers to raise the country’s debt ceiling just a day before the deadline to avoid a debt default.
However, the relief rally was cut short by a dismal manufacturing report for July from the Institute for Supply Management (ISM). While analysts expected a reading of at least 53, the actual figure stood at 50.9, down from 55.3 for the previous month.
Today’s personal spending data further weighed on sentiment, showing the first decline in nearly two years.
The Commercial Department’s consumption expenditure index fell 0.2 percent in June, while its income gauge for the month climbed 0.1 percent, which was the smallest gain since November 2010.
As a result, oil prices returned to Friday’s levels when US benchmark crude dropped below US$95/barrel after the US government reported GDP growth of just 1.3 percent for the second quarter and revised its first quarter economic growth estimate from 1.9 percent to 0.4 percent.
US light, sweet crude for September delivery dropped 47 cents to US$94.42/barrel on the New York Mercantile Exchange (NYMEX) this afternoon.
September Brent crude declined 12 cents to US$116.67/barrel on the ICE Exchange this afternoon.
