Oil retreats as gloom pervades economic outlook

AP News
Posted: Oct 01, 2012 8:24 AM
Oil retreats as gloom pervades economic outlook

The price of oil slipped below $92 a barrel on Monday as closely watched surveys showed the global economy remains weak.

By early afternoon in Europe, benchmark oil for November delivery was down 47 cents to $91.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 34 cents to finish at $92.19 per barrel on the Nymex on Friday.

In London, Brent crude was down 79 cents to $111.60 on the ICE Futures exchange.

Japan's central bank on Monday released a survey that shows deepening pessimism over the economy among the country's big manufacturers. The Bank of Japan's quarterly "tankan" index was minus 3, a worsening from the previous quarter's minus 1.

The survey showed pessimism over the prospects for both domestic and global demand given weak growth in China, the U.S. and Europe.

Meanwhile, a survey by the China Federation of Logistics & Purchasing said its monthly index of manufacturing activity stood at 49.8 points on a 100-point scale. Numbers below 50 indicate a contraction. China's economic growth fell to a three-year low of 7.6 percent in the quarter ending in June.

Concerns that Spain's debt rating may be downgraded from investment grade to junk status added to the negative mood. Spain, which has the fourth-largest economy in the eurozone, is coping with its second recession in three years and has an unemployment rate near 25 percent.

Traders are now looking to upcoming jobs data out of the U.S. for a read on the health of the world's No. 1 economy.

"With Wednesday's presidential debates and the approaching election, we expect all eyes will be on Friday's non-farm payrolls data," said oil analyst Stephen Schork in an email commentary.

In other Nymex energy futures trading:

— Heating oil fell 2.58 cents to $3.1334 per gallon.

— Wholesale gasoline fell 0.72 cent to $2.9129 per gallon.

— Natural gas rose 7 cents to $3.39 per thousand cubic feet.


Pamela Sampson in Bangkok contributed to this report.