Crude oil slid towards US$65 a barrel yesterday amid renewed doubts about economic recovery in the world's biggest energy consumer. The latest blow to crude, which has dropped roughly 9 per cent this week from about $72, was an unexpected fall in orders for US durable goods. The US commerce department said orders for long-lasting items fell 2.4 per cent last month in the worst performance since January.
That followed news on Thursday of a slump in US sales of existing homes last month. Crude's latest three-day losing streak was set off on Wednesday by US energy department figures showing a surprise jump in US oil stockpiles last week. The disappointing economic data spurred risk aversion among investors, which strengthened the US dollar and put further downwards pressure on oil prices, Mike Wittner, the head of oil market research at Société Générale in London, told Bloomberg.
With expectations fading that economic recovery would mop up surplus oil supplies, some analysts predicted that crude could fall below $60 per barrel, a level last seen in mid-July. "It doesn't seem like anybody really wants to own the stuff when they know it could probably drop a little bit further," Tony Rosado, a broker with GA Global Markets in New York, told Dow Jones. "This is a big drop, and people were waiting for it."
But analysts with Goldman Sachs Group in London said rising US oil inventories were masking an increase in global oil demand. They reiterated their previous prediction that crude would reach $85 by the end of this year and raised their forecast for oil demand next year by 1.9 per cent to 86.4 million barrels per day. "The global economic recovery is coming faster than expected," the Goldman analysts, led by Jeffrey Currie, wrote in a research report.