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Petroleum industry

Oil Prices Fall as US Economic Growth Disappoints

Strategic Insights

— 2 min read

Modest economic growth in the US led to a decline in oil prices on the New York Mercantile Exchange (NYMEX) and the ICE futures exchange on Friday. The decline follows the US Commerce Department's report of 2% growth in third-quarter gross domestic product, slightly below the 2.1% expected by economists. Oil traders sold out of positions taken earlier in the week, as the market was anticipating a stronger GDP expansion. The economic recovery has sent other commodities soaring, but high oil and fuel inventories have kept prices from rising far beyond $80 a barrel.

Key Takeaways:

  • Oil futures fell on Friday, with light, sweet crude for December delivery losing $1.01, or 1.2%, to $81.17 a barrel on the NYMEX.
  • Brent crude on the ICE futures exchange gave up 76 cents, or 0.9%, to trade recently at $82.83 a barrel.
  • The decline follows the US Commerce Department's report of 2% growth in third-quarter gross domestic product, slightly below the 2.1% expected by economists surveyed by Dow Jones Newswires.
  • Oil traders sold out of positions taken earlier in the week, as the market was anticipating a stronger GDP expansion.
  • Jason Schenker, chief economist at Prestige Economics, stated that the markets are "sort of recoiling" from the lower-than-expected GDP growth.
  • The economic recovery has sent other commodities soaring, but high oil and fuel inventories have kept prices from rising far beyond $80 a barrel.
  • Traders will now look ahead to next week, when the Federal Reserve is expected to announce a new monetary stimulus plan, which could potentially cause a further weakening of the dollar.

Statistics:

  • Light, sweet crude for December delivery lost $1.01, or 1.2%, to $81.17 a barrel on the NYMEX.
  • Brent crude on the ICE futures exchange gave up 76 cents, or 0.9%, to trade recently at $82.83 a barrel.
  • The US Commerce Department reported 2% growth in third-quarter gross domestic product, slightly below the 2.1% expected by economists.
  • The ICE Dollar Index fell to 77.197, which measures the greenback against a basket of currencies.
  • Front-month November reformulated gasoline blendstock, or RBOB, fell 3.17 cents, or 1.5%, to $2.0822 a gallon.
  • November heating oil lost 2.6 cents, or 1.2%, to $2.2175 a gallon.

Sources:

  • Dow Jones Commodities News via Comtex
  • Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com
  • Copyright (c) 2010 Dow Jones & Company, Inc.

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