| GEO Business|
| Oil falls amid weak US data|
| Updated at: 1842 PST, Saturday, July 17, 2010|
NEW YORK: Oil fell to around $76 a barrel on Friday, dropping alongside equities markets as weak US consumer sentiment and falling consumer prices lowered investor appetite for risk.
Data released on Friday showed US consumer prices fell for a third straight month while consumer sentiment tumbled to an 11-month low, helping push down both oil and equities.
Falling consumer prices can be a sign that an economy is in deceleration, which would reduce demand for oil. Low consumer sentiment implies less consumer demand for goods and services, which would likewise hurt oil demand.
US crude for August settled down 61 cents to $76.01 a barrel, closing the week 8 cents lower than the previous week.
Prices reached an interday high of $77.15.
London Brent's new front-month September crude oil futures contract was down 72 cents to $75.37.
"It's really the demand-side story that is driving the-day-to day price swings," said Tim Evans, energy analyst for Citi Futures Perspective. "The thing that is directing traffic here for the oil market is whether the S&P is up or down."
The S&P 500 and the Dow Jones industrial average were both down more than 2 percent in afternoon trading, spurred by lackluster earnings and the sluggish economic data.
That data overshadowed a decline in the US dollar, which is usually bullish for crude because it makes oil cheaper for buyers that hold other currencies.
Traders also shrugged off news of possible storms that could disrupt Gulf of Mexico oil operations.
The US National Hurricane Center said two low pressure systems, one in the Gulf of Mexico and one east of Nicaragua in the Caribbean Sea, each had a 10 percent chance of becoming the season's next tropical cyclone during the next 48 hours.
It was days away from potentially entering the oil-rich Gulf of Mexico.
US crude prices have traded in a range between $71 and $80 a barrel for almost six weeks as volatility related to the European debt crisis dwindled. This week they have found support near the $75 per barrel range.
"Near-term crude fundamentals continue to look supportive as refinery runs remain on the rise, particularly in Asia following seasonal maintenance," said J.P. Morgan in a research note.
Over the year, prices have stayed within a $23 span, hitting a 19-month peak above $87 and a trough below $65, both in May.