Economic Fears Slice Oil Prices for Second Day

[babylonsister]

Economic Fears Slice Oil Prices for Second Day

By JAD MOUAWAD and MICHAEL M. GRYNBAUM
Published: July 17, 2008


Concerns about a slowing economy and rising inflation pushed oil prices down sharply for a second day on Wednesday, an unusual dip in the oil price rally that began more than six years ago.

The two-day decline totaled more than $10.50 a barrel, but analysts cautioned that it was still unclear how far prices would fall and that the respite may be temporary.

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“The U.S. economy is becoming weaker and is unable to sustain oil consumption at these prices,” said James Crandell, a commodity analyst at Lehman Brothers. “But it is still too early to call this a tipping point because of some major risks we might face this summer, like hurricanes or geopolitical events.”

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“There’s not enough lipstick to put on this pig,” said Richard Moody, an economist at the real estate firm Mission Residential. “No matter how one slices and dices the C.P.I. data, the bottom line is that U.S. workers are falling farther and farther behind.”

A weekly report by the Energy Department showed that commercial oil inventories, which were expected to fall, rose instead last week as more oil went into storage rather than being refined and sold at the pump.

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http://www.nytimes.com/2008/07/17/business/17econ.html?_r=1&ref=todayspaper&oref=slogin

[paparush]

1. I think coordinated short selling drove down oil.