Updated: July 30, 2010 09:49 IST

Oil falls to near $78 as global stocks drop

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A worker refuels a vehicle at a fuel station in Allahabad. Oil prices fell along withe global stocks. File photo
AP A worker refuels a vehicle at a fuel station in Allahabad. Oil prices fell along withe global stocks. File photo

Oil prices fell to near $78 a barrel Friday in Asia as the region’s stock markets dropped on dour economic figures from Japan ahead of a key U.S. growth report.

Benchmark crude for September delivery was down 24 cents to $78.12 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $78.36 on Thursday.

All major Asian stock markets were lower after the Dow Jones industrial average dropped 0.3 percent Thursday and Japan reported a higher jobless rate, falling consumer prices and lower industrial production.

Oil traders often look to stock markets as a barometer of overall investor sentiment.

Investors are cautious ahead of the second-quarter U.S. economic growth number, due to be announced later Friday. Analysts expects GDP expanded about 2.5 percent in the April-to-June quarter, down from 2.7 percent in the first quarter.

Some analysts expect the global economy to slow in the second half, undermining demand for oil.

“The global recovery heading into slow motion will leave the market well supplied, subsequently putting downside pressure on prices,” Saxo Capital said in a report.

Saxo expects prices to fall to $60 at the end of the year, “barring geopolitics or devastating hurricane.”

In other Nymex trading in August contracts, heating oil fell 0.42 cent to $2.0330 a gallon, gasoline was steady at $2.0974 a gallon and natural gas rose 2.7 cents to 4.854 per 1,000 cubic feet.

Brent crude was down 18 cents to $77.41 a barrel on the ICE futures exchange.

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