Oil falls below $76 amid signs US economy weak

[June 24, 2010]  LONDON (AP) -- Oil prices fell below $76 a barrel Thursday in Europe amid signs the U.S. economic recovery and demand for crude remain uneven.

Benchmark crude for August delivery was down 48 cents to $75.87 a barrel late morning London time in electronic trading on the New York Mercantile Exchange. The contract fell $1.50 to settle at $76.35 on Wednesday.

The Energy Information Administration said Wednesday that crude oil supplies increased by 2 million barrels last week, while analysts were expecting stockpiles to drop. Traders got more discouraging news when the government said new home sales dropped by a third to a record low last month.

Oil had jumped from $64 a barrel late last month on investor optimism that Europe's debt and fiscal woes wouldn't significantly slow the U.S. and global economic recovery.

The Federal Reserve said Wednesday that "financial conditions have become less supportive of economic growth," citing "developments abroad" without mentioning Europe by name.

Furthermore, home sales are weak. Also, the number of jobs added to the labor force has been lower than expected, doing little to increase confidence that the U.S. economy will bounce back rapidly from the downturn of 2008.

"It was one thing to bid up oil prices on the presumption that an economic recovery would improve the outlook for everything," Cameron Hanover said in a report. "With economic numbers now seemingly weakening again, it's not as easy to dismiss the stock surpluses that exist in oil inventories."

In other Nymex trading, heating oil fell 0.9 cent to $2.0594 a gallon, gasoline fell 0.83 cent to $2.0740 a gallon and natural gas was off 1.9 cents at $4.785 per 1,000 cubic feet.

Brent crude fell 9 cents to $76.18 on the ICE futures exchange.

[Associated Press; By NATALIE RAGUS]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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