Oil slides on equities weakness

16/07/2009

Crude oil contracts trading on the New York Mercantile Exchange fell during trading this morning (July 16th), weighed down by weakness in key European equity markets.

By 06:10 Eastern Time, the August delivery crude contract had fallen to $60.80 (£37) a barrel, down 74 cents on its settle price at the close of trading yesterday.

The slump came as European stocks wiped out earlier gains on the back of news that American commercial finance giant CIT Group is unlikely to receive federal bailout support from the US government.

However, the effect on commodities and stocks was partially offset by the news that China achieved gross domestic growth of 7.9 per cent in the second quarter.

Speaking to Bloomberg, Andy Sommer, an analyst at Elektrizitaets-Gesellschaft Laufenburg, commented: "The market doesn't know which direction it should go. The Asian countries are coming out of the worst. But warning voices persist that growth is not stable yet."

Heating oil prices also weakened during electronic trading this morning, paring strong gains witnessed yesterday.