Oil plunges further in Asian trade

Agence France-Presse

Posted at Aug 12 2010 11:05 AM | Updated as of Aug 12 2010 07:05 PM

SINGAPORE  - Oil prices sank further in Asian trade Thursday, as a slew of negative economic data worldwide ignited concerns over the fragile state of the global economic recovery, analysts said.

New York's main contract, light sweet crude for delivery in September, shed 81 cents to $77.21  a barrel.

Brent North Sea crude for September delivery retreated 83 cents to $76.81.

"Global economic concerns are pulling down crude prices... quite a bit of bad news is coming out from Europe, Asia and the US," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

"The Chinese economy is starting to show signs of weakness and the US Federal Bank announced that the pace of the economic recovery is becoming more gradual," Shum said.

The Fed had said in a statement issued Tuesday that US growth "has slowed in recent months... (The) pace of economic recovery is likely to be more modest in the near term than had been anticipated."

A Bank of England downgrade of its outlook for growth in Britain also dragged trader sentiment down further, Shum said.

The British central bank Wednesday forecast in a quarterly report that gross domestic product (GDP) growth would average about 3% over the next 3 years.

That was lower than the previous estimate of between 3.0-4.0% in May, owing partly to the impact of the government's recent austerity budget that was aimed at slashing the public deficit.

"We are seeing therefore oil continuing the downward trend from yesterday," Shum said.

Oil prices plunged on Wednesday in a freefall spurred by tumbling global equity markets, despite falling US oil inventories and an upgrade in the International Energy Agency's global oil demand forecast for the year.