U.S. — Oil futures fell below $89 earlier this week after financial markets were surprised by data that indicated the traditionally strong service sector shrank dramatically last month, raising the prospect that demand for energy will weaken along with the economy. Expectations that crude supplies are climbing also took prices lower.
It was the latest in a series of reports that have raised worries that the economy is nearing a recession. And it came amid forecasts that crude supplies grew last week by 2.6 million barrels, according to the average estimate of analysts surveyed by Dow Jones Newswires. The Energy Department will issue its weekly report on oil inventories on Wednesday.
"Crude and products futures are lower... as continued fears of a recession in the U.S. coupled with forecasts for another considerable build in U.S. crude stocks take some of the steam out of the market," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn.
At the pump, meanwhile, gas prices were unchanged Tuesday at $2.977 a gallon, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have been mostly falling lately, following oil's retreat. The Energy Department expects gas prices to rise to new records near $3.50 a gallon this spring, but analysts say the prospect of a severe economic slowdown throws such dire forecasts into question.
SOURCE: Yahoo News