Oil moves down near US$77 amid economic uncertainty

By early afternoon in Europe, benchmark crude for December delivery was down 26 cents to US$77.20 a barrel in electronic trading on the New York Mercantile Exchange, recovering from US$77.07 earlier in the day. The contract gave up US$2.12 to settle at US$77.46 on Thursday.

Crude prices were dragged down by uncertainty about the economic outlook, including concerns about deflation and a possible double-dip recession.

Oil has seesawed between US$76 a barrel and US$82 for about a month as the dollar — whose fall this year has help boost crude prices from US$32 in December — stabilized somewhat during the last few weeks. Investors often buy commodities such as oil as a hedge against a weaker dollar and inflation.

An analysis by Petromatrix on Friday said the past four weeks have seen a pattern of “a rally on Monday/Tuesday on the Dow and dollar hype and a correction in the second half of the week after the reality check of the weekly oil statistics showing no improvement in demand.”

It said US$80 a barrel “has proven to be a very strong level of resistance but until now US$77 a barrel has also been a strong level of support.”

“We view this sideways pattern as sustainable going forward through the balance of this year,” said Galena, Illinois-based Ritterbusch and Associates in a report.

On Thursday, the U.S. Labor Department said employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures. However, some analysts expect Asian economic growth, led by China, to help offset a sluggish recovery in developed countries.

In other Nymex trading, heating oil fell 1.12 cents to US$1.9852 a gallon. Gasoline for December delivery was down 0.44 cents to US$1.9651 a gallon. Natural gas for December delivery dropped 5.30 cents to US$4.289 per 1,000 cubic feet.

In London, Brent crude for December delivery fell 22 cents to US$77.42 on the ICE Futures exchange.

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