Related Keywords: Energy
--Oil prices fall on rising U.S. jobless claims, weaker GDP growth, rising crude stockpiles
--Futures recently down $1.25 to $86.57/bbl
--U.S. oil inventories rise 2.2 million barrels, EIA says, to 22-year high
By Jerry A. DiColo Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures fell Thursday after sharp declines in the previous session, as data showing a weaker U.S. economy and rising domestic oil stockpiles added to worries about the euro zone.
Light, sweet crude for July delivery recently traded $1.25, or 1.4%, lower at $86.57 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.42 lower at $102.05 a barrel.
The number of U.S. workers filing new applications for unemployment benefits rose by 10,000 to 383,000, the Labor Department said Thursday, the largest increase since the first week of April. Additionally, the Commerce Department said U.S. gross domestic product increased at a 1.9% annual rate in the first quarter, below the previous estimate of 2.2% growth.
A weaker economy is translating into weaker fuel demand, with data Thursday from the Energy Department showing U.S. oil stockpiles rose 2.2 million barrels last week, above analysts' estimate of a 200,000-barrel build. Stocks now stand at their highest level in 22 years.
"People aren't buying, people aren't shipping, manufacturing is still slow and that's where the consumption comes from," said Rich Ilczyszyn, a broker at iiTrader in Chicago. "We could fall another ten bucks."
Oil prices have fallen by more than 20% since their peak above $110 a barrel in mid-February, stung by renewed worries about Europe's debt crisis and cooling tensions between Iran and the West.
More recently, economic weakness in the U.S. and slower growth in China have added to concerns of falling oil use.
"The economy is still on shaky legs. Jobs numbers are weak, GDP isn't doing so well, and we won't have Europe to rely on for demand," said Carl Larry, head of energy-research newsletter Oil Outlooks and Opinions.
A slump in the U.S. would lower demand for energy in the world's largest oil consumer, and market watchers already are seeing signs of falling fuel use.
The rise in oil stockpiles came along with declines in stockpiles of fuel products. Gasoline stocks fell by 800,000 barrels last week, while stocks of distillate, which include heating oil and diesel, fell by 1.7 million barrels.
Analysts surveyed by Dow Jones Newswires expected gasoline stocks to fall by 600,000 barrels. Stocks of distillate, which include heating oil and diesel, were expected to fall by 200,000 barrels.
Front-month June reformulated gasoline blendstock, or RBOB, recently traded 3.76 cents lower at $2.8206 a gallon. June heating oil recently traded 3.17 cents lower at $2.7081 a gallon.
The oil market has tumbled in recent days along with stock markets and the euro, as traders flee riskier assets in the face of a deteriorating debt situation in Europe. Crude prices fell more than 3% Wednesday amid a broad selloff on fears Spain won't be able to save its troubled banks.
The dollar hit a fresh 22-month high against the euro. A stronger dollar typically causes a drop in oil prices by making the dollar-denominated commodity more expensive for buyers using other currencies.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; email@example.com
(END) Dow Jones Newswires
May 31, 2012 11:35 ET (15:35 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.
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