Oil falls below $78 on signs world economy slowing

[August 12, 2010]  SINGAPORE (AP) -- Oil prices fell below $78 a barrel Thursday in Asia, extending losses amid signs the global economy will grow at a slower rate in the second half than previously expected.

Benchmark crude for September delivery was down 28 cents at $77.74 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.23 to settle at $78.02 on Wednesday.

Oil traders look to equities as a gauge of overall investor sentiment, and most Asian stock markets fell while European stocks were mixed in early trading Thursday.

The Dow Jones industrial average plunged 2.5 percent Wednesday after the Commerce Department said the trade deficit widened in June to its highest level in 20 months as exports dipped. This could signal a slowdown in manufacturing and a slumping economy.

"The economy is still very fragile and wishy-washy, every couple weeks the mood of the market changes," Sander Capital said in a report. "The economy has a fear of devaluing assets and if this occurs then consumers will not consume."

In other Nymex trading in September contracts, heating oil fell 1.87 cents to $2.0565 a gallon, gasoline dropped 1.18 cents to $1.9858 a gallon and natural gas slid 1.4 cents to $4.312 per 1,000 cubic feet.

Brent crude was down 38 cents at $77.26 a barrel on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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