Oil falls below $77 after weak U.S. econ data

By Brian Ellsworth

NEW YORK (BestGrowthStock) – Oil fell below $77 a barrel on Thursday after disappointing U.S. economic data curbed expectations for future demand growth

A U.S. Federal Reserve report showed slowing growth in factory activity in the Mid-Atlantic region, pushing down both oil prices and equities markets.

U.S. crude for August settled down 42 cents at $76.62 a barrel, after earlier jumping to $77.66. The contract for ICE Brent for August delivery, which expired on Thursday, settled down 58 cents at $76.19 a barrel.

Brent for September delivery closed down 57 cents at $76.09.

U.S. crude fell as low as $75.33 after the release of the Fed data but pared losses in the late afternoon along with equities markets.

“Today’s economic data is disappointing and indicates that the recovery is stalling,” said Andy Lebow a broker with MF GLOBAL in New York. “Crude futures are moving in fairly wide range and are rangebound at this point, but as in recent sessions, moving in lockstep with the stock market.”

Prices rose earlier after news that U.S. industrial output had beaten consensus forecasts by eking out a 0.1 percent month-on-month rise.

Lower economic growth is generally seen as reducing future demand for crude oil.

Equities markets, which have for weeks traded in close correlation with crude oil, also fell on the economic data. The S&P 500 and the Dow Jones industrial average were both down around 0.4 percent in late afternoon trading. (.N: )

Adding to bearish news for futures prices, energy industry data provider Genscape said crude inventories at the key U.S. Cushing, Oklahoma oil hub rose in the week to July 13 to 39.93 million barrels.

The U.S. Energy Information Administration (EIA), in its own weekly stocks report on Wednesday, said Cushing stocks rose to 36.12 million barrels in the week to July 9.

The EIA’s data showed a near 5 million-barrel drop in crude oil. It also showed larger-than-expected product build as refiners boosted rates above 90 percent.

China said its economic growth cooled slightly to 10.3 percent in the second quarter in a slowdown that is likely to extend over the rest of the year.

Signs of slower Chinese growth tend to dampen oil markets because analysts say crude prices recovered from post-financial crisis lows of late 2008 in large part because of Chinese demand for fuel.

Earlier this week, oil prices looked set to breach a critical technical resistance level — the 200-day moving average near $78.50 a barrel — in a move that some thought would take oil into a new trading range straddling $80 a barrel.

But signs of weaker growth have since doused sentiment and technical analysts now see oil trading in a tight band between $76 to $78 a barrel before pulling back to the low $70s.

Friday’s session may provide traders with new direction with the Thomson Reuters/University of Michigan consumer sentiment survey expected to show a dip in July.

Also, the U.S. National Hurricane Center said on Thursday a large tropical wave located about 400 miles west of the Cape Verde Islands in the Atlantic Ocean had a 10 percent chance of becoming the season’s next tropical cyclone during the next 48 hours.

(Additional reporting by David Turner and Emma Farge in London, Robert Gibbons in New York and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy and Sofina Mirza-Reid)

Oil falls below $77 after weak U.S. econ data