Oil prices ease as growth worries pervade

August 17, 2011 | 10:00

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Oil prices fell back Tuesday as worries about global economic growth continued to cast a shadow over the market.

In New York, West Texas Intermediate crude for September delivery lost $1.23 to close at $86.65 a barrel.

In London trade the Brent North Sea contract for September gave up 44 cents a barrel to end at $109.47.

"A bearish tone all day," Matt Smith of Summit Energy characterized the mood of traders.

"It seems there's a bit more calm into the market this week, but overall the picture is still one of concerns about economic growth going forward."

The main news hanging over the market was Germany's reporting economic growth of just 0.1 per cent in the second quarter, raising fears it is losing momentum.

"The dynamism in the German economy has cooled significantly since the robust start to the year," the federal statistics office said in a statement.

Meanwhile, Eurostat's preliminary estimate showed the entire 17-nation eurozone slowing to 0.2 per cent growth in the second quarter.

Chris Williamson, chief economist at financial information services company Markit, said the shaky performance of both Germany and France "raises concerns that the euro area's hitherto strong core countries are undergoing a much deeper than previously thought soft patch."

The summit of President Nicolas Sarkozy of France and Germany's Chancellor Angela Merkel, where they called for the formation of a eurozone economic government to help tame the bloc's debt crisis, did not help much.

They also said they would propose a new financial transaction tax, a move which did not go over well with traders, including in the oil markets.

"The financial transaction tax was another slap in the face of crude and general risk appetite," said Smith.

AFP

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