Tuesday July 28, 08:49 PM
Oil prices retreat amid fresh caution
NEW YORK (AFP) - Oil prices reversed course Tuesday and moved lower as some of the recent optimism on the US economy was tempered by a weak survey on consumer confidence.
New York's main contract, light sweet crude for September delivery, slid 1.15 dollars to close at 67.23 dollars a barrel.
Brent North Sea crude for September delivery declined 93 cents to settle at 69.88 dollars per barrel.
After strong gains in the past two weeks, oil prices fell amid renewed caution on the economic outlook after a weaker-than-expected report on consumer confidence.
US consumer confidence fell for a second straight month in July as a difficult job market weighed on sentiment, the Conference Board said.
The business research firm said its confidence index fell to 46.6 from 49.3 in June, which came after an eight-month peak of 54.8 in May. The figure was weaker than analyst expectations of 49.0.
The survey "underlines that if this is a recovery, it is a very weak one characterized by frequent relapses. Two steps forward, one step back," said Capital Economics analyst Paul Ashworth.
"There won't be a meaningful recovery in the US economy until consumers start to spend more freely again."
This offset a report from Standard & Poor's/Case-Shiller report showing a slight uptick in home prices in major US cities.
But David Rosenberg, chief economist at Gluskin Sheff & Associates, said it was too soon to call it a rebound.
"Stabilizing residential real estate prices is absolutely an essential ingredient in transitioning out of the recession, though inventories are still far too high to warrant a sustained upturn," he said.
"Bottoming is one thing, booming is quite another."
But Mike Fitzpatrick at MF Global said the pullback in oil prices is probably a pause on the way up as the economy recovers.
"The overarching theme in the oil markets is and has been the spreading optimism that recession has or is close to bottoming and recovery will shortly bring rising demand for oil and refined products," he said.
"While sentiment does not really match fundamentals, it will take a fairly grim pall over the markets to change enough minds to spark a reversal, and so, the path looks open to 75 or 80 dollars."
Meanwhile, traders were looking ahead to Wednesday's upcoming weekly oil inventories report from the US government's Department of Energy.
Analysts expect a drop in crude oil stockpiles and a rise in those of refined products.
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