Posted: 01 July 2009 0408 hrs
A driver transfers gasoline into an underground tank at a gas station in San Anselmo, California.
NEW YORK: Oil prices sank from eight-month peaks on Tuesday after new data signalled a plunge in consumer confidence in the United States, the world's largest energy consumer.
New York's main contract, light sweet crude for delivery in August, tumbled 1.60 dollars from Monday's closing price to 69.89 dollars per barrel, after earlier touching 73.38 - a level unseen since October.
London's Brent North Sea crude for August delivery fell 1.69 dollars to 69.30 dollars a barrel, having earlier surged as high as 73.50.
Consumer confidence in the United States - the world's biggest energy consuming nation - sank in June as households worried about the prolonged recession and vanishing jobs, the Conference Board said on Tuesday.
The news pushed the dollar higher against the euro on currency markets as investors flocked to buy the world's main safe-haven currency and moved away from risky currencies.
A stronger US currency makes dollar-priced oil more expensive for buyers holding weaker currencies, which in turn tends to dampen demand and pull the market lower.
"The rising dollar affected the crude oil prices," said Mike Fitzpatrick of MF Global.
Oil prices have increased dramatically - by 40 percent or more than 20 dollars - in the second quarter on gaining confidence that the global slump is easing. It had closed at 49.66 dollars on March 31, which was the last day of the first quarter.
The Conference Board, a US business research group, said on Tuesday its consumer confidence index retreated to 49.3 points in June from a revised 54.8 in May, an eight-month high. Most analysts expected a much stronger reading of 55.3 points.
This dashed hopes for a recovery soon from the recession that began in December 2007.
"Once again we've seen the green shoots arguments shot down," said analyst David Fineberg at financial spread-betting firm CMC Markets in London.
"This shift in outlook is also hammering oil prices - crude is back below 70 dollars a barrel - so in summary, falling consumer demand is painting a rather bleak picture."
Traders also digested data showing that Britain's recession-battered economy shrank at its fastest pace in more than 50 years during the first quarter of 2009 amid the worst global slowdown in decades.
British gross domestic product contracted 2.4 percent in the first three months of the year compared to the final quarter of 2008.
Oil had plunged from record peaks of more than 147 dollars in July 2008 to 32 dollars in December as a global downturn slashed energy demand, but the market has clawed back ground on hopes of "green shoots" of recovery.
The continuing turmoil in Nigeria is also weighing on the oil market, traders said.
On Monday, Nigerian rebels had announced a new raid against a Shell oil facility and said they had killed at least 20 soldiers in a gun battle, a claim denied by the security forces.
The raid was just the latest in a series that have targeted Shell facilities this month and which have continued despite last Thursday's offer from President Umaru Yar'Adua of an amnesty for the militants. - AFP/de
From ChannelNewsAsia.com; see the source article here.
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