Oil extends losses as economy pessimism persists
LONDON (AP) — The price of oil fell below $91 a barrel Wednesday, tracking stock markets which dropped on renewed pessimism about the outlook for economic growth.
Benchmark crude was down 59 cents to $90.78 a barrel by midmorning London time in electronic trading on the New York Mercantile Exchange. The contract dropped 56 cents to settle at $91.37 a barrel Tuesday in New York.
Oil failed to get a lasting boost from an improvement in U.S. consumer confidence to its highest level since February. Markets were overshadowed by comments from Charles Plosser, president of the U.S. Federal Reserve's Philadelphia branch, indicating that the Fed's efforts to support the world's biggest economy would likely fall short of its goals.
The comments reinforced the current pessimism about growth prospects and dragged down stocks on Wall Street and then Asia. Disappointing news out Europe and Spain Wednesday also weighed on investors.
The Commodity Research Team at Commerzbank said in a briefing that "the renewed escalation of the debt crisis in the eurozone, with violent protests in Spain against the planned new austerity measures, has sparked gloomier sentiment on the financial markets once again and is also putting oil prices under pressure."
Benchmark crude has fallen from near $100 since the middle of last month. Energy prices tend to fall when growth is slow because of lower demand. The U.S. economy is growing slowly. China's export-driven economy has cooled off, largely due to Europe's problems.
Brent crude was down $1.06 cents at $109.39 a barrel on the ICE futures exchange in London. In other energy futures trading on the New York Mercantile Exchange heating oil was down 2 cents at $3.09 a gallon, wholesale gasoline gained 3 cents to $2.82 a gallon while natural gas gained 2 cents to $3.12 per 1,000 cubic feet.