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Crude Oil Below $80, Brent Below $90

June 21, 2012 at 22:48 by Vladimir Vyun

Crude oil fell today below $80, while Brent was below $90, as manufacturing was contracting in various parts of the world, signaling that demand for fuel may wane. China’s Manufacturing Purchasing Manager’s Index fell from 48.4 in May to 48.1 in June, the lowest level in 7 months. The eurozone PMI was down from 45.1 to 44.8 this month, reaching the three-year low. The US manufacturing index slipped from 54.0 to 52.9, the lowest rate since July 2011. A value above 50.0 indicates expansion, while a figure below that level signals contraction.

Adding to the negative impact of the bad manufacturing data, US unemployment claims stayed almost unchanged, while speculators were hoping for a decrease of unemployment. As was expected, markets reacted negatively to all the bad news. The Standard & Poor’s GSCI Index, tracking 24 raw materials, tumbled as much as 2.8 percent. The Standard & Poor’s 500 Index lost 2.2 percent.

Futures for delivery of crude oil in August slid by $3.25 to $78.20 per barrel on NYMEX, reaching the lowest price since October 4. Brent crude declined from $92.59 to $89.25 per barrel, the lowest settlement since December 2, 2010, as of 22:09 GMT on ICE today.

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