New York: Oil prices fell on Friday after US Federal Reserve chairman Ben Bernanke stopped short of announcing new stimulus measures to boost the ailing US economy.
Shortly after Bernanke’s keenly awaited speech in Jackson Hole, Wyoming, Brent crude futures were down $1.20 at $109.42 a barrel. US light crude futures were down $2.05 at $83.25 a barrel.
While the Fed chairman said it was clear, “the recovery from the crisis has been much less robust than we had hoped”, he did not announce any concrete stimulus measures for the economy, despite a US government report revising second quarter economic growth lower on Friday.
“People are beginning to digest the data; is the economy slowing? Is demand for oil going to be that low?” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
At last year’s Jackson Hole meeting, Bernanke hinted at what eventually became a $600 billion quantitative easing bond-buying programme that many said help support the economy but also boosted the price of many commodities, stoking inflation. Some price support came from Hurricane Irene as it barreled towards US East Coast refineries, posing a potential threat to supply; while the ongoing conflict in Opec member Libya and international pressure on Syria also underpinned sentiment.
But worries about the outlook of the faltering recovery remained high on the agenda. Deutsche Bank joined a growing chorus of banks in downgrading oil price forecasts, trimming its Brent forecast for 2011 to $112 a barrel from $114 a barrel and US light crude to $94 a barrel from $100.
“We now believe that the economy is likely to grow more slowly in 2011-2012,” Deutsche Bank’s Adam Sieminski said in a note. Economic worries on the other side of the Atlantic also kept investors on edge. The Spanish economy grew at a slower pace in the second quarter than the first, fuelling concerns Spain could slip back into recession if the euro zone economy continued to worsen.
German consumer sentiment fell slightly going into September, hitting a 10-month low as the euro zone debt crisis and fears of another recession in Europe and the US weighed on consumer expectations, a survey showed.