NEW YORK — Crude oil prices tumbled Thursday on fresh news of U.S. economic weakness and a pledge by 28 countries to release 60 million barrels of oil from strategic reserves.
AP/U.S. Department of Energy
A marine unloading point for crude oil southwest of Baton Rouge serves the U.S. Strategic Petroleum Reserve. File photo.
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AP/U.S. Department of Energy
A marine unloading point for crude oil southwest of Baton Rouge serves the U.S. Strategic Petroleum Reserve. File photo.
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On the New York Mercantile Exchange, light, sweet crude for August delivery fell almost $5 a barrel to around $90.51 a barrel. Oil's most recent high was $113.93 a barrel in April.
Stocks fell sharply on news of a rise in initial unemployment claims with the Dow Jones industrials off 200.
Oil companies from BP in Britain to Total in France and ExxonMobil in the U.S. were all marked down heavily in the wake of the oil news, adding to the already depressed mood in stock markets.
STORY: Unemployment claims rise, new-home sales fall
The mood in stock markets has been downbeat ever since Wednesday's warning from Federal Reserve chief Ben Bernanke that the problems plaguing the U.S. economy "may be stronger and more persistent" than originally thought. However, Bernanke gave no indication the central bank will back another monetary stimulus after the current $600 billion program runs out at the end of the month.
Stock trend
Dow Jones industrial average, five trading days
The slowing U.S. recovery was evident in figures Thursday that showed the number of Americans applying for unemployment rose 9,000 last week to 429,000, while new home sales fell 2.1%.
"As the Fed says, housing remains depressed," said Sal Guatieri, senior economist at BMO Capital Markets. "It's likely to stay that way until job growth picks up, and the latest jobless claims figures are far from encouraging."
The International Energy Agency, based in Paris, warned that the tight oil market "threatens to undermine the fragile global economic recovery" by forcing individuals and businesses to spend more on energy and less on other goods and services.
It said it made the move because normal increase in demand over the summer "will exacerbate the shortfall further" and pledges by some oil producers to boost ouput will take a while to have an effect.
The 28 members of the IEA — mainly oil-importing countries in Europe — will make 2 million barrels a day available from their emergency stocks over an initial period of 30 days.
Months of fighting in Libya have removed 132 million barrels of light, sweet crude oil from the market by the end of last month, the agency estimated.
Prices have been high in recent months. They eased this week, to below $93 a barrel on Thursday, due to concerns that U.S. economic growth and crude demand will weaken. Demand growth in China, the world's second-largest oil consumer, has also slipped slightly but remains robust.
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