Oil took a beating tyesterday, as investors sold off the precious crude in the wake of a weak consumer confidence report that renewed pessimism towards economic recovery.
The University of Michigan reported that its consumer confidence index dipped to 63.2, down from 66 in July. This is the second straight month that the index has moved lower, after a four month streak of gains. In June the index was up at 70.8, which was the highest since back in February 2008.
Analysts had forecast that the index would come in at 69.
The drop in consumer confidence led to a sell off on Wall Street and sparked sharp selling by oil traders. The precious crude closed out the week down $3.01 a barrel at $67.51, down 4.27% on the day.
Consumer spending represents roughly 70% on America's GDP, so any sign that people are not out there spending raises questions over the future of oil demand.
In addition to today's consumer confidence reading, traders were still digesting news that July retail sales declined unexpectedly. Analysts had expected to see an increase in July retail sales as consumers rushed out to take advantage of the government's "cash for clunkers" program, but this was not the case. Instead of the 0.8% jump in retail sales that had been forecast, retail sales actually dropped by 0.1% last month.
Despite yesterday's drop, oil prices are still more than double their lows from this past December when prices were under $33 a barrel.
Gasoline prices remained unchanged, with a national average of $2.647 for a gallon of regular unleaded. This is 13 cents higher than prices last month, but still $1.131 lower than where we were this time last year, when we were dealing with record high gasoline prices.
Below is a current chart for oil:
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Reader Comments (Page 1 of 1)
8-17-2009 @ 1:04AM
Raymond R. Murray said...
Gas should be down considerably the last few weeks. The oil compnies and the speculators tried to jack it up unsecessfully so they have cut back on refining to try and keep the price up. Need government oversight and regulation of the oil companies in order to prevent what happened to the financial markets when unregulated.