Crude Drops Below $72

Source:

"We're getting all the classic signals the economy is slowing down."

Oil plunged to its lowest level in seven weeks as sales of previously owned U.S. homes fell more than forecast in July, boosting speculation that economic growth is slowing, curbing fuel demand.

Futures dropped as much as 2.3% as U.S. stocks plummeted after the National Association of Realtors reported purchases of existing homes tumbled 27.2% to a 3.83 million annual rate. U.S. crude supplies rose last week, according to a Bloomberg News survey.

"We're getting all the classic signals that the economy is slowing down," said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis.

Crude for October delivery fell $1.10, or 1.5%, to $72 a barrel at 11:32 a.m. on the New York Mercantile Exchange. Earlier, it touched $71.45, the lowest price since July 7. Oil has lost 13% since Aug. 3.

Home sales were forecast to drop 13.4% to a 4.65 million rate, according to a Bloomberg News survey. The July figure was lower than all 74 estimates in the survey.

The Standard & Poor's 500 Index fell 0.9% to 1,057.65, and the Dow Jones Industrial Average lost 83.59, or 0.8%, to 10,090.82.

U.S. gross domestic product growth probably slowed to a 1.4% annual pace in the second quarter, down from an estimate of 2.4% last month, based on the median forecast of 79 economists surveyed by Bloomberg News before a Commerce Department report Aug. 27.

U.S. oil supplies probably increased 400,000 barrels last week from 354.2 million in the prior week, based on the median estimate from 16 analysts surveyed by Bloomberg News before an Energy Department report tomorrow.

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