Oil prices drop below $75

Associated Press • July 1, 2010 Oil prices fell below $75 a barrel today as sliding global stock markets and continuing uncertainty about demand dragged down confidence among crude investors. By early afternoon in Europe, benchmark crude for August delivery was down 93 cents to $74.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 31 cents to settle at $75.63 on Wednesday. "Crude oil prices still seem to be stuck in a trading range, and there is no compelling reason for a breakout in either direction," said Edward Meir, senior commodity analyst at MF Global in New York. The Dow Jones industrial average fell 1 percent Wednesday to its lowest level this year and extended losses to 10 percent in the second quarter. All major and European stock markets dropped today. Oil traders often look to equity markets as a barometer of overall investor confidence. "With global equities falling, the dollar holding strong, and the future uncertain, oil could easily drop in price," Sander Capital Advisors said in a report. "One can easily make the argument that the price of oil should fall back below the $70 level." Oil prices ping-ponged between $64 and $87 in the second quarter on fluctuating investor fears about the impact of Europe's debt and fiscal crisis on the global economic recovery. "There has been a good deal more talk about a double-dip recession, or a 'W' bottom," said a report from U.S. energy consultancy Cameron Hanover. "Nothing we have seen this week would tell us definitively that a double-dip is not in the cards. And that fear has pressed equities and oil prices lower." Analysts also said forecasts about the strongest Gulf of Mexico hurricane season in five years were keeping a floor under oil prices, on the rising risk of an interruption of oil supplies from the region. In other Nymex trading in July contracts, heating oil fell 2.43 cents to $1.9900 a gallon, gasoline dropped 2.42 cents to $2.0362 a gallon and natural gas was down 6.9 cents at $4.547 per 1,000 cubic feet. In London, Brent crude was down $1.10 to $73.91 a barrel on the ICE futures exchange.