Oil market is selling off because of the weak economic numbers outof the U.S

Tag : crude products
Traders were also awaiting the release later Friday of U.S. payrolland unemployment figures for June, as well as July car sales, formore signs of where the American economy is heading.
By midday in Europe, light, sweet crude for September delivery fell57 cents to $123.51 a barrel in electronic trading on the New YorkMercantile Exchange. The contract lost $2.69 to settle at $124.08 abarrel on Thursday.
"The market is selling off because of the weak economic numbers outof the U.S.," said Tetsu Emori, commodity markets fund manager atASTMAX Futures Co. in Tokyo. "Growth and oil demand is slowing inthe U.S., Europe and Japan, and it's too optimistic to thinkemerging market demand will compensate for that."
The U.S. Commerce Department said Thursday that the country's grossdomestic product rose just 1.9 percent in the second quarterdespite government tax rebates aimed at boosting the economy.Economists had expected growth of 2.4 percent. The weak 1 percentGDP figure of the first three months of 2008 was also modifiedlower to 0.9 percent.
While oil prices rose briefly Thursday as the U.S. dollar weakenedin the immediate reaction to the disappointing GDP figures, theybegan sliding again even as the dollar lost ground to other majorcurrencies.
This, analysts said, was because the usual correlation between highoil prices and the weaker dollar was no longer a given.
"The overall momentum on crude oil has clearly changed from thedynamics of the first half of the year," said Olivier Jakob ofPetromatrix in Switzerland.
He noted that news which earlier would almost certainly have pushedprices higher, like attacks on oil pipelines in Nigeria and worriesabout Iran's nuclear ambitions, was no longer "enough to providesustained support."
A deadline expires Saturday for Tehran to show it will stopexpanding its uranium enrichment program, at least temporarily, orface the threat of new U.N. sanctions.
Earlier this week, Iranian officials, including supreme leaderAyatollah Ali Khamenei, pledged to continue the country's nuclearprogram.
Meanwhile, a Labor Department report said Thursday the number ofpeople seeking jobless benefits rose to the highest level in fiveyears.
Easing American pump prices are further evidence of waningconsumption of gasoline. The average price of a gallon of regularslipped 1.7 cents to $3.909, according to auto club AAA, the OilPrice Information Service and Wright Express (nyse: WXS - news - people ).
Nymex oil prices have dropped off around $24 a barrel sincereaching a record high of $147.27 on July 11.
"Prices will likely correct over the next six months to the $100 to$110 range," Emori said. "There aren't enough fundamental factorsright now pushing prices higher."
In other Nymex trading, heating oil futures fell 3.84 cents to$3.4209 a gallon while gasoline prices fell 3.49 cents to $3.0360 agallon. Natural gas futures fell 6.5 cents to $9.054 per 1,000cubic feet.
In London, September Brent crude was down $1.97 at $122.01 a barrelon the ICE Futures exchange.