Oil slumps on growth concerns, stronger dollar

October 24, 2012 9:23 am 

NEW YORK, Oct. 24 — Crude prices Tuesday slumped as weak third-quarter corporate earnings worsened global growth concerns and dollar strengthened against its major counterparts, with the U.S. benchmark dipping to the lowest level since Mid-July.

Market sentiment was heavily pressured by disappointing earnings from big companies like DuPont and 3M Co. for the third quarter.

The weak results of international companies came in after the industry giant Caterpillar Inc. warned on a faster-than- expected global economic slowdown on Monday, adding more signs to a slowing world economy.

Market risk appetite shrank further and pushed down the commodities after data showed the Federal Reserve Bank of Richmond' s manufacturing index for October dropped sharply to negative 7.

Meanwhile, renewed concerns about European debt crisis added more pressure. Spain's borrowing costs rose on Tuesday after the rating agency Moody's downgraded five Spanish regions.

Moreover, business sentiment of the manufacturing sector in France fell to its lowest level in more than two years, adding more concerns to European economic situation.

On the supplies side, TansCanada, a pipeline company, restarted a key pipeline connecting Canada and the U.S. on Monday. The system carries about 590,000 barrels of Canadian oil a day to the delivery point for Nymex's crude-oil futures contract.

The North Sea Buzzard, Britain's largest oil field, was expected to restart on Oct. 25 or 26 after a maintenance shutdown, suggesting supplies increase.

The dollar benefited from the lower risk appetite and rose about 0.4 percent against a basket of six currencies. A stronger dollar pushed the dollar-denominated commodities further down.

Light, sweet crude for December delivery fell 1.98 dollars, or 2.23 percent to settle at 86.67 dollars a barrel on the New York Mercantile Exchange. Brent crude for December delivery fell 1.19 dollars, or 1.09 percent to close at 108.25 dollars a barrel. (PNA/Xinhua)

LOR/EBP

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