Oil wallows below $75 in Asia on dim economic news
KUALA LUMPUR, Malaysia (AP) — Oil prices wallowed below $75 a barrel Friday in Asia as a spate of weak figures on the U.S. economy added to expectations that demand for crude will weaken.
Benchmark crude for October delivery edged up 2 cents to $74.45 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell 99 cents to settle at $74.43 on Thursday.
Crude prices have retreated nearly 8 percent in the past two weeks amid evidence of slowing economic growth. Prices rebounded Tuesday but the rally was short-lived after a U.S. report showed crude inventories fell less than expected last week as demand remained sluggish.
Adding to the gloom, the U.S. Labor Department said Thursday that jobless benefit claims rose last week while the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region dropped during August.
Fewer jobs mean fewer people filling their tanks to drive to work. Also, fewer vacationers will be on the road after Labor Day (Sept. 6), which should help drag down pump prices.
"While risk appetite has been swinging back and forth during the past few weeks, the greater risk still tilts to the downside as a result of generally unfavorable economic guidance," Ritterbusch and Associates said in a report.
It expects crude prices to slide by another $2 to $3.
Cameron Hanover said in a report that crude prices should be substantially lower — below $35 and potentially as low as $10 a barrel based on the weak state of demand. It estimated the artificially high oil price is costing American consumers $300 billion to $425 billion a year.
"Prices are near $75 instead because investors — gargantuan investors — are pricing oil more in terms of gold than in terms of the market's history, the euro, the dollar, or supply and demand," it said.
"It is good to see oil prices sell off on Thursday but it is a deck-chair off a cruise ship. Prices should be substantially lower, based on record supplies during a recession with no timetable for recovery," it added.
In other Nymex trading in September contracts, natural gas for September delivery fell 0.3 cent to $4.168 per 1,000 cubic feet while heating oil was up 0.59 cent at $2.007 a gallon and gasoline rose 0.13 cent to $1.93 a gallon.
Brent crude was up 10 cents at $75.40 a barrel on the ICE futures exchange.