Oil falls below $88 per barrel as global growth fears dominate sentiment
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The price of oil fell below $88 a barrel Tuesday as shaky economic recoveries in China and the U.S. raise the prospect of weaker demand.
Benchmark oil for May delivery was down $1.05 to $87.66 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped $2.58, or 2.8 percent, to finish at $88.71 a barrel on Monday after hitting $87.86 earlier in the session. Crude has dropped nearly 10 percent this month.
The Chinese government on Monday said growth in the world's second-largest economy slowed to 7.7 percent in the first quarter from 7.9 percent in the final quarter of last year. Growth was expected to accelerate slightly to 8 percent. Analysts have warned that China's recovery from its deepest slump since the 2008 global crisis is weak.
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That slowdown, combined with weak employment and manufacturing reports from the U.S., suggests that demand won't be strong enough to absorb the ample supplies on the world market.
"This isn't a fall just because the global economy is shifting down, this is about a world that has enough oil," said Carl Larry of Oil Outlooks and Opinions in a market commentary.
Brent crude, which is used to price oil used by many U.S. refiners to make gasoline, fell $1.01 to $99.62 a barrel on the ICE Futures exchange in London.
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In other futures trading on the Nymex:
— Wholesale gasoline fell 2.4 cents to $2.736 a gallon.
— Heating oil dropped 2.8 cents to $2.802 a gallon.
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— Natural gas rose 0.7 cent to $4.144 per 1,000 cubic feet.