Oil slips on economic concerns
Prospects for US economy described as "unusuallu uncertain."
July 22, 2010 9:22 by Reuters
Oil slid for a second day on Thursday, a day after Fed Chairman Ben Bernanke rekindled unease across financial markets about the pace of economic recovery, while rising U.S. inventories also kept prices in check.
Bernanke’s comment that the prospects for the U.S. economy are “unusually uncertain” in testimony to lawmakers on Wednesday sent crude prices back down to the middle of a tight trading range of less than $5 over the past two weeks, after touching a July peak above $78.50 a barrel earlier in the day.
U.S. crude for September > declined 11 cents to $76.45 at 0305 GMT, while ICE Brent shed 8 cents to $75.29.
“Unusual uncertainty means the market cannot have solid confidence of economic recovery,” said Ken Hasegawa, a commodity derivatives manager at brokerage Newedge in Japan.
Bernanke faces another round of testimony on the economy to U.S. lawmakers on Thursday.
Asian stocks slipped and the yen rose on Thursday ahead of European bank stress tests. The results of the European Union examination of banks are due on Friday and are expected to show generally positive results for Greece, Italy and Ireland and a few failures in Portugal and Spain.
“The crude oil market is waiting to go higher to $80, $85 and $90, but it still needs time. Everyone understands that the (U.S.) inventory level is relatively high. That is one of the bearish factors that may be capping it down.”
U.S. crude stockpiles rose 360,000 barrels in the week to July 16, government statistics from the Energy Information Administration showed on Wednesday, against a forecast for a 1.4-million-barrels drop.
Rising crude imports helped offset an increase in refinery capacity utilization. Higher refinery use boosted gasoline inventories 1.1 million barrels, more than a forecast gain of 900,000 barrels. Distillate stocks jumped up 3.9 million barrels, more than double the expected rise.
An updated forecast that cut the chances of a hurricane developing near the Caribbean also dampened crude prices.
The U.S. National Hurricane Center late on Wednesday said a weather system hovering over Puerto Rico and Hispaniola had a 40 percent chance of becoming a tropical cyclone in the next two days, down from a 70 percent likelihood late on Tuesday.
(By Alejandro Barbajosa, Editing by Ed Lane)