Crude Falls Below $63 in Extended Sell-Off

By: Ernest Scheyder AP Email
By: Ernest Scheyder AP Email

NEW YORK (AP) - Oil prices fell for the fifth straight day Tuesday, with a barrel costing $10 less than it did just one week ago when crude hit a new high for the year.

Benchmark crude for August delivery settled at $62.93 a barrel on the New York Mercantile Exchange, down $1.12.

Oil prices had already begun to slide after peaking last Tuesday, and dismal jobs numbers last week from both the U.S. and Europe have hastened the decline.

Optimism about a quick economic recover, and a rebound in energy demand, were dampened after the Labor Department reported Thursday that U.S. economy lost a larger-than-expected 467,000 jobs in June. On the same day, a report from Europe indicated that in the 16
countries that use the euro spiked to a 10-year high in May.

For months a weak dollar has brought more investment money into the oil market even though oil and gasoline in storage have been extraordinarily high throughout the year.

Stockpiles of gasoline have increased steadily for the past four weeks during a time when traffic volumes usually peak. Supply data coming from the Department of Energy on Wednesday is expected to show that trend continuing.

In its short-term outlook released Tuesday, the department said it expects consumption of liquid petroleum to contract by about 3.3 percent this year.

Still, the Energy Department expects oil to average about $70 per barrel for second half of the year, and the average retail gasoline price to float around $2.36 per gallon.

Oil prices have doubled since the beginning of the year and that volatility has brought increased scrutiny from Washington. On Tuesday, federal regulators said they would examine whether the government should impose limits on the number of futures contracts in oil and other energy commodities held by speculative traders.

Investors have plowed millions into exchange-traded funds like the United States Natural Gas Fund. The funds allow indivuduals to buy shares that track commodities like natural gas.

Trading in the fund was suspended Tuesday when the company told
the Securities and Exchange commission in a filing that it could not issue any more shares without SEC approval. Trading resumed in the afternoon and shares fell more than 2 percent, or 31 cents to $12.25.

In other Nymex trading, gasoline for August delivery fell less than a penny to settle at $1.7328 a gallon and heating oil dropped 2.6 cents to settle at $1.6007. Natural gas for August delivery fell 5.8 cents to settle at $3.429 per 1,000 cubic feet.

In London, Brent prices shed $1.12 to settle at $63.23 a barrel on the ICE Futures exchange.

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