Oil slides amid global jitters

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Oil extended losses Thursday, dropping 3.5%, as investors remained concerned about the strength of the global recovery after worse-than-expected readings on manufacturing, housing and the job market.

What prices are doing: Crude oil futures for August delivery fell $2.68, or 3.5%, to settle at $72.95 a barrel.

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The national average price for a gallon of regular unleaded gas decreased to $2.754, down 0.1 cent from the previous day's price of $2.755, according to motorist group AAA.

What's moving the market: Oil continued to slide as investors' risk appetite weakened after several weaker-than-expected reports.

The rate of manufacturing growth slowed in June, according to a report released Thursday. The Institute for Supply Management's index of U.S. manufacturing dropped to 56.2 in June from 59.7 in May. The reading came in much lower than the slight decrease to 59 economists had expected, according to a Briefing.com consensus survey.

The National Association of Realtors said that pending home sales plunged 30% in May. While economist expected to sales to drop in the first month after the expiration of the homebuyer tax credit, the decrease was shocking.

The government said initial filings for unemployment insurance climbed more than-expected last week.

Meanwhile, the Chinese purchasing manager's index fell to 52.1 in June from 53.9 the previous month, indicating a slowdown in Chinese manufacturing.

What analysts are saying: "Crude oil prices extended losses and retreated below $75 per barrel after receiving further pressure from the downtrend in the global equity markets and amid expectations of a weaker oil demand from China, following the poor Chinese PMI figures this morning that hurt sentiment for risk appetite," said Myrto Sokou, analyst at Sucden Financial, in a research report.

She added that investors were also playing close attention to the jobs data ahead of the June employment report due Friday.

"The energy market is reacting negatively to the downtrend in the equity markets," Sokou said. "During these disappointing economic conditions, crude oil prices could remain within the range of $70-$80 per barrel, confirming OPEC's concept for the ideal price range." To top of page

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