Trade deficit shrinks as oil imports slow

Oil prices to triple by 2030

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NEW YORK (CNNMoney.com) -- The U.S. trade deficit eased in September as imports of crude oil dropped and economic weakness worldwide curbed exports.

The Commerce Department said Thursday the nation's trade deficit shrank $3.1 billion in September to $56 billion from a revised $59.1 billion in August. The decline brings the imbalance to its lowest level since Oct. 2007.

Economists had expected the deficit to narrow to $57 billion, according to a survey by Briefing.com.

"It is clear that the combination of global recession and the global credit crunch is causing worldwide trade to dry up," said Jay Bryson, an economist at Wachovia Economics Group.

September exports were nearly $10 billion less than August exports of $165.3 billion. Exports of capital goods, industrial supplies and materials measured the sharpest declines.

Overall imports in the month fell $12.5 billion, reflecting a sharp decrease in industrial supplies and materials such as crude oil. Imports of consumer goods also fell while imports of capital goods rose.

"The drop in the headline deficit was due entirely to falling oil imports, as a result of the drop in prices," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Imports of crude oil decreased 17% to 253 million barrels from 308 million barrels in August. The decline comes as demand for gasoline and other petroleum products has waned.

Oil prices have fallen roughly 60% since July's all-time high near $147 a barrel. At the same time, retail gasoline prices are down 47% from the record high national average price of $4.114 set in July.

Meanwhile, imports from China rose nearly 4% to more than $33 billion. That brought the trade deficit with China to $195.44 billion for the first 9 months of the year.

The Chinese government said Monday the country's October global trade gap swelled by 30% to $32.5 billion, hitting a new high for a third-straight month. The surplus with the United States rose 13.6% to $17.5 billion, while that with Europe rose 12.2% to $15.6 billion.