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VOL. 35 | NO. 37 | Friday, September 16, 2011




Oil falls sharply on global economic worries

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NEW YORK (AP) — Oil prices tumbled 5 percent Thursday after some of the world's top financial officials gave a gloomy reading on the international economy.

Oil, a bellwether that tracks the market's mood, has dropped 29 percent since April as high unemployment, weak consumer confidence and expensive gasoline slowed down global growth.

Investors were hoping that the Federal Reserve would come up with a strategy this year to give the economy a boost. But the Fed gave little comfort following its two-day meeting this week. The central bank plans to push long-term interest rates lower, but investors said it would do little good with interest rates already near record lows.

Analysts focused instead on the Fed's bleak outlook, which pointed to continued weakness in the job market and only modest increases in household spending.

Separately, the departing chief economist of the European Central Bank warned that heavy government debt threatened the euro.

"This is just sudden and strong confirmation that the economy is not improving," said Michael Lynch, president of Strategic Energy & Economic Research. "Energy demand is going to be very poor."

Benchmark crude on Thursday plunged $4.40, or 5.1 percent, to $81.52 per barrel in New York. It fell as low as $80.25 earlier in the day, the lowest since Aug. 19. Brent crude, which is used to price oil that's produced in foreign countries, fell $4.11, or 3.7 percent, to $106.25 in London.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said oil prices are falling with stocks and other investments.

"This is part of a huge sweeping wave of deflation that's hitting every major asset," Kloza said.

FedEx Corp., the world's second biggest package delivery company, cut its earnings expectations on Thursday because of the weak economy. FedEx said consumer demand for technology and electronics products from Asia is falling. It echoed similar concerns raised last week by rival United Parcel Service Inc.

Meanwhile, U.S. gasoline prices fell more than a penny on Thursday to $3.556 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has fallen from a high near $4 per gallon earlier this year, but the national average is still almost 84 cents more than a year ago.

In other energy trading, heating oil fell 9 cents, or 3 percent, to $2.8483 per gallon, and gasoline futures gave up 9 cents, or 3.3 percent, to $2.5779 per gallon. Natural gas lost 1 cent at $3.724 per 1,000 cubic feet.

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