By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures extended their decline on Friday, as a deteriorating global economic outlook deepened concerns about demand for the commodity.
Oil for September delivery CL1U +0.33% declined 56 cents, or 0.6%, to $81.82 a barrel on the New York Mercantile Exchange. It earlier traded as low as $79.17 a barrel.
“It is clear that deceleration in growth ... seems to be gathering momentum and now spreading beyond Europe and the U.S.,” MF Global analysts wrote in a note to clients.
“But we think we will be able to avoid tipping into recession here in the U.S... The more energy prices go down, the more optimistic we get, as oil, more than any other commodity complex, has the capacity to perhaps single-handedly jump-start growth,” they added.
The drop came on top of the $5.20, or 5.9%, plunge the previous session, when the front-month contract suffered its biggest percentage and dollar price decline since Aug. 8.
The drop came after a slew of macroeconomic data came in negative, chiefly among them a downbeat reading on factory activity in the Philadelphia region
While the Philly Fed survey results “certainly raises the risk of recession ... the oil market data continues to show no sign of recession,” analysts at Goldman Sachs said in a report to clients Friday.
“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, despite being more than halfway through the 30-million-barrel (strategic reserves) release,” they said.
Moreover, supplies from countries outside the Organization of the Petroleum Exporting Countries have disappointed, raising the risk of an extremely tight market in the second half of the year if a recession is avoided, they added.
Meanwhile, September natural gas futures NG11U +1.57% advanced 7 cents, or 1.8% to $3.96 per million British thermal units, offsetting some of the recent losses for the product.
The contract declined 1% the previous day, after a weekly government supply report showed a larger-than-expected increase in inventories.
