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Crude oil futures drop to 7-day low on demand outlook

Published 09/06/2011, 04:33 AM
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Investing.com – Crude oil futures were down for a third day on Tuesday, falling to a seven-day low as the downbeat outlook for global growth weighed on future oil-demand expectations.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD84.33 a barrel during European morning trade, tumbling 2.45%.   

It earlier fell as much as 3.5% to trade at USD83.22 a barrel, the lowest price since August 26.

Crude prices continued to be weighed by fears that the U.S. is slipping back into a recession after data on Friday showed that the world's largest economy failed to create any jobs in August.

Oil traders have been paying close attention to readings on U.S. employment levels for signs that people are returning to work, thus driving more and using more energy.

Meanwhile, concerns that the euro zone’s sovereign debt crisis is worsening also weighed as the cost of insuring Italian sovereign debt against default rose above that of Spain for the first time since December 2009 on Monday.

A widespread Italian strike was scheduled for Tuesday to protest against government austerity measures.
 
Markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report on Wednesday, while Thursday’s government report could show stockpiles climbed by 0.8 million barrels last week, while gasoline stockpiles were projected to fall by 0.9 million barrels.

The Energy Department is scheduled to release its weekly stockpile report on Sept. 8, a day late because of the Labor Day holiday.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery rose 0.65% to trade at USD110.80 a barrel.

The spread between the two contracts widened to USD26.47 a barrel, re-approaching the record high of USD26.97 it hit on September 2.

Nymex floor trading was shut yesterday for the Labor Day holiday and electronic trades will be booked with today’s transactions for settlement purposes.


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