HOUSTON - Oil prices fell more than 3 percent yesterday after a new report projected a cumulative $7 trillion US deficit for the next decade.
Prices initially swung higher, touching $75 per barrel for the first time in 10 months on new signals that consumers are feeling a little better about the economy. But lingering questions about when and how fast any recovery might occur led to some volatile markets.
Benchmark crude for October delivery fell $2.32 to settle at $72.02 a barrel in trading on the New York Mercantile Exchange.
“Is oil destined to make new highs, or is it just a matter of time before we see a correction of massive proportions?’’ asked PFGBest Research analyst Phil Flynn, in a note to clients.
The Conference Board provided a bit of good news: Its Consumer Confidence index rose to 54.1 from 47.4 in July. Economists surveyed by Thomson Reuters had expected just a slight increase, to 47.5.
Still, the index is well below 90, the minimum level associated with a healthy economy. Anything above 100 signals strong growth.
Energy prices have risen sharply this year, mostly on the belief the economy is getting better and demand will rebound soon. Despite that optimism, analysts say energy demand remains in the doldrums and seasonally lower demand for gasoline as the summer holidays end will exacerbate that weakness.