Wednesday, 25 August 2010

Crude Drops Below $72 as Equities Decline Amid Concern Recovery Is Slowing

Oil dropped to its lowest level in 11 weeks as sales of previously owned
U.S. homes fell more than forecast in July, boosting speculation that
economic growth is slowing and curbing fuel demand. Futures declined 2 percent as U.S. stocks plummeted after the National
Association of Realtors reported purchases of existing homes tumbled 27.2
percent to a 3.83 million annual rate. U.S. crude supplies rose last week
amid a 20-year high in petroleum stockpiles, according to estimates of
analysts surveyed by Bloomberg News. "We're getting all the classic signals that the economy is slowing down,"

Bill O'Grady, chief market strategist at Confluence Investment Management in
St. Louis. Crude for October delivery fell $1.47 to settle at $71.63 a barrel on the
New York Mercantile Exchange, the lowest level since June 7. Oil has lost 13
percent since Aug. 3 and has decreased 3.7 percent in the past year. Prices declined from the settlement as equities extended losses after oil
closed. The American Petroleum Institute reported at 4:30 p.m. that U.S.
crude-oil stockpiles decreased 1.85 million barrels to 356.8 million.
October oil fell to $71.50 a barrel in electronic trading at 4:38 p.m. Home sales were forecast to decline 13.4 percent to a 4.65 million rate,
according to a Bloomberg News survey. The July figure was lower than all 74
responding economists estimated.

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