Thursday spelled bad news for oil futures as dwindling economic faith sent crude prices below $85.
West Texas Intermediate light sweet crude, set for September delivery, dropped 5.8% in afternoon trading, down $5.11 to $82.47 a barrel on the New York Mercantile Exchange.
Brent crude for October fell 3.4% as well, dropping $3.77 to $106.83 on the London-based ICE Futures.
And as in the past, the trend in oil prices followed equities down.
Morgan Stanley (NYSE: MS), on Thursday, warned that the U.S. and European economies are dangerously close to double dipping.
With that, the bank lowered global growth estimates into 2012.
For the remainder of 2011, estimates were cut to 3.9% from 4.2%, and for 2012 they were slashed down to 3.8% from 4.5%.
Equities tumbled worldwide after this report was issued. In Madrid, Milan, and Paris, equities plummeted over 6%. In London, Paris, and Zurich, they were down as much as 5%. And Wall Street dipped an average 4%, said the Bangkok Post.
Even China’s economy couldn’t escape Morgan Stanley’s growth estimate cuts. Their 2012 estimates dropped to 8.7% from 9%, Bloomberg said.
Oil demand in the U.S. has been falling behind expected rates, and analysts believe demand will continue to stay low.
Unemployment claims for last week increased by 9,000 to 408,000 from the previous week, when they had managed to sink below 400,000.
But this jump is just another reason why demand is not expected to pick back up anytime soon.
The Federal Reserve Bank of Philadelphia also announced on Thursday that U.S. manufacturing activity dropped in August, sending the index down to negative 30.7 from July’s index of positive 3.2.
Gold, however, was up amid the heavy drop in commodities as investors turned to precious metals.
That’s all for now,