As economic conditions continue to feed bearish sentiment, crude oil futures sustained heavy losses on Tuesday. On the IntercontinentalExchange, West Texas Intermediate light, sweet crude oil futures for October delivery dropped more than 4 percent to $71.67 per barrel.
December 2010 futures contracts lost a bit over 3 percent to $74.78 per barrel.
Brent crude futures, which are more internationally oriented than the U.S.-specific WTI crude futures, lost 3.02 percent to $74.35 per barrel, a spread between the two contracts that may represent weaker demand on this side of the Atlantic.
“In the near term, we’re going to see some concern as refiners here in the U.S. go down for maintenance,” said Hussein Allidina of Morgan Stanley in an interview on Bloomberg Television’s ‘InBusiness’ segment. “As we go into the back half of the year things do start to look more positive.”
Another reason for the drop-off is the ending of what some call the “summer driving season,” which peaks on Labor Day. After that date, workers tend not to take as many holidays and drive less.
In addition, Hurricane Earl appears to be headed for the East Coast rather than the Gulf of Mexico, meaning production will not be threatened but tourism will be damped down.
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