Oil back below $74 a barrel

25/08/2009

Oil prices fell during electronic trading on the New York Mercantile Exchange this morning (August 25th), with the headline contract moving back below $74 (£45) a barrel as equity indexes retreated in Asia and London.

There was also concern that China may soon restrict its lending conditions in the coming weeks, a move which could put the dampers on global economic recovery.

Speaking to Bloomberg, Andrey Kryuchenkov, an analyst at VTB Capital in London, said that commodities such as crude and heating oil need support from China if a rally is to be sustained.

"Oil will trend lower alongside equities, but the downside will be limited until we see demand fundamentals really kick in," he predicted.

Traders will also be paying close attention to data due to be released by the Energy Information Administration tomorrow, as many are hopeful that the unexpected drop in crude, heating oil and propane inventories witnessed in last week's report will be sustained.