Oil slides toward $59, extending 2-week sell-off
SINGAPORE: Oil prices dived to near $59 a barrel Friday in Asia, extending a two-week sell-off fueled by growing investor pessimism about global economic growth and crude demand.
Benchmark crude for August delivery was down 67 cents to $59.22 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell 52 cents to settle at $59.89.
Prices have fallen $14 a barrel, or 19 percent, since June 30 after poor unemployment data from the U.S. and Europe sparked investor doubts that the global economy was poised for strong recovery this year.
"There's been a shift in market sentiment," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "Earlier this year, there was a lot of talk about green shoots. Now the focus is on the green shoots shriveling."
Traders will be looking this week to the first big batch of second quarter corporate results for clues about economic growth. Investors will also be eyeing data on housing starts, retail sales and industrial production.
"Expectations are that most companies are going to report poor results and a conservative outlook," Shum said. "It's not unreasonable to expect crude prices to move down to the mid-$50s over the coming days and weeks."
Traders have been disappointed by evidence of weak gasoline sales in the U.S. over the Independence Day holiday weekend of July 4, a time that usually marks the peak of gasoline demand for the summer.
"The U.S. summer driving season has been a non-event for a second year in a row," Shum said.
In other Nymex trading, gasoline for August delivery was steady at $1.64 a gallon and heating oil dropped 1.35 cents to $1.52. Natural gas for August delivery slid 7 cents to $3.30 per 1,000 cubic feet.
In London, Brent prices fell 61 cents to $59.91 a barrel on the ICE Futures exchange.