On Friday, signals of economic weakness plagued both the U.S. and Europe, causing crude oil to fall in New York and London.
The decision for a $122 billion bailout plan to Spain was approved on Friday, pushing down the euro and the S&P 500.
Spain’s Cristobal Montoro, the national Budget Minister, anticipated a continuation of the national recession into 2013, sending bond rates above 7%.
Crude oil for August delivery on the New York Mercantile exchange fell 1.3% on Friday to $91.44 a barrel. Brent crude on the London-based ICE Futures fell 0.9% to $106.84 for September delivery.
“Oil is down because the euro is weaker, there is concern about Spain, and the British deficit widened,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This is a reminder that oil demand might be weak.”
Another reminder of this came from the still-struggling U.S. economy. Though things have been slowly but steadily turning upward lately, Friday brought a whirlwind of turnarounds.
Gasoline consumption, which had been on the rise since March, fell in June, as did gasoline deliveries. Consumption was down 2.5% from the same month last year.
Summer is usually the peak driving season in the U.S., and low records for the beginning of the season did not bode well.
The National Association of Realtors also posted poor data for home purchases in June, which fell 5.4% from the previous month to the lowest rate in eight months.
And unemployment rates jumped for 27 states as well. Though the national rate remained steady at 8.2%, this is the highest number of states with a rise in unemployment in nearly a year.
Needless to say, June was a dismal month for the U.S. economy.
Oil had reached a nine-week high before falling on slowing global economic growth. Crude for August delivery closed at $92.66 on Thursday.
“Oil markets don’t move in a straight line,” said Harry Tchilinguirian, BNP Paribas SA’s London-based head of commodity markets strategy. “People have seen sharp increases in prices and they are more liable to take profits.”
Though this economic data is troubling, it isn’t necessarily an end-all. The U.S. housing market had been in slow recovery lately, so this news might represent a set-back rather than a continuing decline.
And July is usually a peak summer travel month, so gasoline demand could correct.
But no one can say what will happen in Europe as Spain continues to struggle along with the rest of the eurozone.
In a Bloomberg survey, 44% of analysts saw oil prices falling next week while 38% thought it would rise.
Commodities generally respond to economic data, and as global recovery remains unsteady and uncertain, so will oil prices.
That’s all for now,