Oil slips below $67 as European stocks falter

[July 31, 2009]  LONDON (AP) -- Benchmark crude for September delivery was down 32 cents to $66.62 a barrel by midday European time in electronic trading on the New York Mercantile Exchange. On Thursday, the contract rose $3.59, or 5.6 percent, to settle at $66.94.

Traders have gotten whiplash this week as prices jerked up and down on investor uncertainty about the strength of the global economic recovery.

"Sentiment is very fragile," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "Going forward, we're going to be looking at a seesawing market."

Crude investors were cheered by a jump in stock markets in the U.S. on Wednesday and in Asia on Thursday, but that rally came to an end Friday in Europe, where investors booked profits before the weekend.

Markets will be focusing Friday on the first estimate for second quarter U.S. gross domestic product -- many analysts predict it shrank at an annualized rate of 1.5 percent, a vast improvement from the 5.5 percent recorded in the prior three month period.

Any surprises, however, could cause some market volatility, analysts say.

While the worst of a severe recession may be over, investors are cautious about a rebound this year. Signs of weak gasoline consumption and high crude inventories have dampened enthusiasm.

"When there's an indicator from the U.S. that suggests the recovery will be slow to emerge, prices get knocked back a bit," Moore said. "I think oil over the next few months will probably have a downward bias."

In other Nymex trading, gasoline for August delivery fell 2.07 cents to $1.97 a gallon and heating oil fell 0.87 cent to $1.76. Natural gas for August delivery fell 4.3 cents to $3.7 per 1,000 cubic feet.

In London, Brent prices fell 31 cents to $69.80 a barrel on the ICE Futures exchange.

[Associated Press; By CARLO PIOVANO]

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

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