Oil prices continue to fall on debt fears
LONDON — Oil prices fell to near $71 a barrel today, extending last week’s losses amid fears that U.S. job gains are slowing and that the European debt crisis may be spreading.
Benchmark crude for July delivery was down 20 cents to $71.31 a barrel at late morning European time after falling to as low as $69.51 earlier in the session in electronic trading on the New York Mercantile Exchange. The contract lost $3.10 to settle at $71.51 on Friday.
Oil traders often look to stock markets as a gauge of overall investor sentiment, and most Asian and European indices plummeted today, extending a rout that began Friday with a 3.2 percent drop in the Dow Jones industrial average.
Weak U.S. employment data for May and comments from a Hungarian official saying his country could be hit by a Greece-like fiscal crisis have undermined confidence in global economic growth and oil demand.
“Investors are fleeing riskier assets so they’re dumping stocks and oil,” said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. “The market may be overreacting a bit, but the jobs report shows that the U.S. economy is still struggling.”
Some analysts point to falling U.S. crude inventories as a sign of improving crude demand and expect prices to rebound later this year.
“The shift in the market’s view of forward fundamentals has been too extreme,” Goldman Sachs said in a report. “We continue to expect crude oil prices to move into an $85 to $95 trading range in the second half.”
In other Nymex trading in July contracts, heating oil rose 8.9 cents to $1.9666 a gallon and gasoline rose 1 cent to $2.01 a gallon. Natural gas was down 3.4 cents at $4.763 per 1,000 cubic feet.
Brent crude was down 16.6 cents at $72.21 a barrel on the ICE futures exchange.
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