Oil futures: Crude dips below $95/Bbl after 2Q GDP data

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Crude oil futures prices dipped briefly $95 a barrel, after news that the U.S. economy grew at a slower-than-expected rate in the second quarter.

The market already had been unnerved by a continued standoff in efforts to reach agreement on raising the U.S. debt ceiling ahead of a fast approaching Aug. 2 deadline. "All eyes will be on Washington over the next 72 hours," said Edward Meir, senior commodity analyst at MF Global.

U.S. gross domestic product grew at a rate of 1.3% in April to June, the Commerce Department said, while economists surveyed by Dow Jones Newswires had expected growth of 1.8%. A steep downward revision in first-quarter data to 0.4% from the earlier 1.9% estimate heightened disappointment over the U.S. economy's performance.

Light, sweet crude oil futures for September delivery on the New York Mercantile Exchange were down 1.9%, or $1.79 a barrel, at $95.65. The contract hit a post-data low of $94.95 a barrel, the lowest intraday price since July 18. ICE North Sea Brent crude for September was down $1.06 at $116.30 a barrel.

Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., said the GDP data report is "an additional dose of disappointment" for oil prices and sees potential for a near-term run toward $94 a barrel.

Tom Bentz, director at BNP Paribas Commodity Futures, said the oil market looks weak based on trading chart patterns, even before considering bearish news. He noted crude fell below its 200-day moving average near $97.71 a barrel on Thursday, setting the stage for further selling.

Traders were keeping close watch on Tropical Storm Don, which is expected to make a rainy landfall in the Texas refining region late Friday or early Saturday without gaining hurricane status. The threat to offshore oil and gas production in the Gulf of Mexico appeared to be waning after precautionary shutdown of minor volumes. BP PLC (BP, BP.LN) said Friday it was beginning to return staff to offshore platforms after evacuations in recent days.

Traders said the market could focus on heating oil and gasoline futures prices later in the day as the August contracts expire at the settlement.

U.S. gasoline demand, during the peak summer season, is extremely weak. Government data show demand in the week ended July 22 was the weakest in 11 years for this tme of year. Demand for gasoline, the most widely used petroleum product in the world's biggest oil consumer, is down 0.7% so far this year, the Energy Information Administration said Wednesday. But that figure doesn't take into account a sharp 4.1% drop in May from a year earlier that was revealed in government data released Thursday.

August-delivery reformulated gasoline was down 3.91 cents at $3.0785 a gallon, while August heating oil futures were 1.88 cents lower, at $3.0864 a gallon.



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shreveport  |  July, 29, 2011 at 12:40 PM

Wow, such a big drop, and the storage is still near RECORD LEVELS? Americans need a LOT BETTER excuse as to why we are still being charged out the kazoo at the pump! And just how much are the SPECULATORS now buying that barrel of crude for before they jack up the price to us the consumers? If this is the weakest demand in eleven years, then there is obvious gouging going on. What was the price of a gallon of gasoline 11 years ago as compared to today? So many questions and so much phoney bologna coming out of the MARKET.


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