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Crude oil down on strong greenback, weak economic data

Published 07/20/2012, 07:56 AM
Updated 07/20/2012, 07:58 AM
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Investing.com - Crude oil futures moved sharply lower in early U.S. trade Friday, as weak economic data signaled potential slowing economic growth and a strong greenback weakened demand. .

On the New York Mercantile Exchange, Crude oil futures for September delivery traded at USD91.74 a barrel in U.S. trade, plunging 1.40%.

Crude oil was likely to find support at USD86.81 and resistance at USD93.25.

Oil broke a 7 day winning streak due to economic growth concerns and worldwide uncertainty.

Adding to the oil bearish uncertainty, euro zone leaders will hold a conference call today to sign off on the terms of a EUR100 billion Spanish bank bailout package. 

The call is expected to just focus on the Spanish bail out and not talk about Greek or Italian economic issues. 

In further oil bearish news, markets are anticipating the euro zone consumer sentiment index, next week,  that is widely expected to indicate a reading of negative 20, down from negative 19.8 a month ago. 

The number has been down trending, having hit the lowest level since August 2009. 

In addition, further pressuring gold demand,  a gauge for manufacturing is forecasted to be 45.2 this month. Although higher than the 45.1 reading last month, it remains below the critical 50 level that separates economic expansion from contraction. 

Markit Economics releases the numbers on July 24. 

Yesterday, Spain sold 5 year bonds posting an average yield of 6.459, the highest since 2005. 

Meanwhile, speculation that Ben Bernanke will institute monetary stimulus due economic slowdown signals in the U.S. is helping lift the support crude.

However, increased middle east tensions capped off by a Bulgarian bus bombing led to the earlier rally in crude oil on supply disruption concerns.

US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, added 0.51% to trade at USD83.40.


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