Tuesday June 23, 12:41 PM
Oil prices drop below $67
LONDON (AFP) - Oil prices fell on Tuesday, trading under 67 dollars in London as global economic recovery hopes were dampened, analysts said.
A decline in world stock markets weighed on the oil market while a stronger dollar prompted many traders to lock in profits from a recent rally that saw prices climb past 73 dollars, they said.
New York's main futures contract, light sweet crude for delivery in August, slid 34 cents to 67.16 dollars a barrel. The July contract expired Monday at 66.93 dollars.
London's Brent North Sea crude for August dropped 31 cents to 66.67 dollars.
"Crude oil ... has continued lower this morning as market participants' confidence in an economic recovery receded," said Nimit Khamar, energy market analyst with the Sucden brokerage in London.
"Investors will now be looking towards the (US) Federal Reserve meeting on Wednesday and the US housing data today and tomorrow for further indication on the outlook of the global economy."
The World Bank on Monday slashed its forecast for developing nations' economies, estimating growth at 1.2 percent this year while warning more measures were needed for a recovery to take hold.
Consequently, oil prices fell sharply Monday, losing more than two dollars in London and almost three dollars in New York.
Investors also took profit after the dollar strengthened.
A stronger US currency makes dollar-priced oil more expensive for buyers holding weaker currencies, which in turn tends to dampen demand and pull the market lower.
"The main driver of oil has gone beyond traditional measures of just supply and demand and has metamorphisised into a macroeconomic force that at times measures the state of the global recovery and at other times becomes a safe haven from the dollar or inflation or systemic risk," said Phil Flynn of Alaron Trading.
Oil prices plunged from record highs of more than 147 dollars in July 2008 to around 32 dollars in December as the economic slowdown crushed demand for energy but the market has since rebounded on hopes for an economic recovery.
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