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Oil falls to near $81 a barrel in Asia, extending losses fueled by global slowdown fears
SINGAPORE (AP) ' Oil prices fell to near $81 a barrel Friday in Asia, extending a sell-off fueled by investor fears that a slowing global economy will undermine demand for crude.
Benchmark oil for September delivery was down $1.07 to $81.28 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell $5.20, or 5.9 percent, to finish at $82.38 on Thursday.
In London, Brent crude for October delivery was down $1.53 to $105.49 per barrel on the ICE Futures exchange.
Commodities such as oil fell sharply Thursday as signs of weakening U.S. economic growth raised worries that the country could be headed for a recession. A report on Philadelphia-area manufacturing dropped to its lowest in two years while home sales tumbled 3.5 percent in July.
Concerns that European banks may face funding difficulties amid the EU's debt crisis also weighed on investor sentiment. The Dow Jones industrial average sank 3.7 percent Thursday and Asian stock markets fell Friday.
"The world economy has clearly stalled and it is hard to see any meaningful recovery in demand unless commodity prices, and especially oil, continue to weaken," Capital Economics said in a report. "The fragility of the world economy means there is high chance that fresh financial shocks will trigger more falls in commodity markets."
Capital Economics said it expects Brent to fall to $85 during 2012.
Other analysts are more optimistic, pointing to recent signs of strong U.S. crude demand.
"The recent U.S. oil demand numbers do not support the view that the economy has fallen back into recession," Goldman Sachs said in a report. "We expect supply-demand balances to continue to move to critically tight levels in 2012, with prices above recent levels by next year."
In other Nymex trading for October contracts, heating oil fell 1.1 cents to $2.87 per gallon and gasoline futures dropped 0.4 cent to $2.66 per gallon. Natural gas for September delivery rose 2.9 cents to $3.92 per 1,000 cubic feet.