Futures on crude oil closed with a loss on Tuesday amid concerns over the pace of global economic growth and strengthening US dollar.
By the end of NYMEX trades, September futures on WTI oil declined by 1.4% (USD 1.23) and constituted USD 86.65 dollars per barrel. October futures on Brent and ICE oil lost 71 cent only to equal USD 109.13 per barrel.
As it was announced on Tuesday, the GDP of Germany, the largest eurozone economy, in the second quarter grew just by 0.1% as compared to the previous quarter, while growth by 0.4% was in fact expected. Eurozone GDP growth slowed down for the second quarter to 0.2%. This is a two-year low, which raised concerns about the ability of the region to solve is debt problems.
Market participants will focus their attention on Paris meeting of German Chancellor Angela Merkel and France’s president Nicolas Sarkozy. Oil futures fell after these two leaders decided not to support eurozone obligations which, as many traders believe, are of crucial importance for settling debt troubles of the region.
German Chancellor Angela Merkel and France’s president Nicolas Sarkozy agreed on the details of the plan on creation of a eurozone economic council, yet they turned down the idea of introduction of eurozone obligations as potentially harmful for the healthiest European economies. They called for cutting expenditures and other long-term measures of reducing the debt. Still the leaders did not put forward any immediate solutions.
Germany and France, the two large eurozone economies, are expected to manage efforts on curbing any damage related to the debt. Nevertheless, lack of any precise suggestions following the Tuesday meeting disappointed traders.
The data released in Tuesday in the USA was contradicting. New housing construction in July shrank by 1.5% after growth during two preceding months. The fall exceeded the expectations. Prices for imported goods in July gained 0.3%, while analysts had not predicted any changes.
Additionally, industrial production in July increased by 0.9% versus forecasted 0.6%. As traders say, this growth will bring about higher demand for distillates, but prices did not grow amid such news.