Oil Prices Plummet Amid Economic Concerns

As the world economy teeters on the brink of a double-dip recession, oil prices have been falling for the sixth straight session, with light, sweet crude for August delivery settling at $71.98 a barrel on the New York Mercantile Exchange. The market's optimism about a robust recovery has been tempered by disappointing economic data, including a slower-than-expected growth rate in the U.S. nonmanufacturing sector in June. As a result, commodity and equity prices have experienced sharp declines, with oil prices plummeting 8.7% since June 25.

Key Takeaways:

Oil prices have fallen for the sixth straight session, with light, sweet crude for August delivery settling at $71.98 a barrel on the New York Mercantile Exchange.
The market's optimism about a robust recovery has been tempered by disappointing economic data, including a slower-than-expected growth rate in the U.S. nonmanufacturing sector in June.
Commodity and equity prices have experienced sharp declines, with oil prices plummeting 8.7% since June 25.
Concerns about a double-dip recession have surfaced, driven by the waning economic boost of government stimulus spending and fears of further adding to deficits.
Disappointing employment data and other indicators have cast doubt on whether the private sector will spend enough to sustain a recovery.
Energy analyst Tim Evans stated that the market failed to sustain an upside, while trading advisory firm Cameron Hanover's Peter Beutel predicted that slower-than-expected economic growth could knock prices back to between $55 and $65 a barrel.
A sluggish world economy would take longer to use up surplus inventories that built up during the downturn in 2008 and 2009.
The Department of Energy's Energy Information Administration will offer the next indicator of oil supply and demand with data due at 11 a.m. EDT Thursday, delayed one day by the Independence Day holiday.

Statistics:

Oil prices have fallen 8.7% since June 25.
The Dow Jones Industrial Average is down over 4% over the same period, trading recently at 9696.7.
U.S. crude stocks are expected to fall by 1.8 million barrels, according to the mean of six analysts' forecasts in a survey by Dow Jones Newswires.
Gasoline inventories are expected to drop by 100,000 barrels.
Distillate stocks, including heating oil and diesel, are seen rising 1.7 million barrels.

Sources:

Dow Jones Commodities News via Comtex, New York, Jul 06, 2010.
Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com (Brian Baskin contributed to this article.)