The recent crude oil rally, which began on February 8 2010, ran into trouble Tuesday as global sentiments turned bearish on disappointing economic reports.
April NYMEX crude oil futures lost $1.45, or 1.8 percent, to end at $78.86. After peaking at $80.4 around 2:45 am EST, crude dropped on troubling economic developments from Europe and traded range-bound in the U.S. session on disappointing consumer confidence data.
NYMEX March natural gas futures, which sunk to 11-week lows on the previous day, lost 2 percent.
Concern about global demand was the big story Tuesday.
France started the day by reporting that consumer spending fell 2.7 percent in January.
Germany then reported lower than expected January business confidence reading. Europe's cold weather, which hindered construction, was factor. A more troubling development was that consumer spending also dropped significantly.
Finally, the U.S. reported a consumer confidence reading of 46.0 while analysts polled by Reuters was expecting 55.0. The reading was the lowest level in 10 months. The Conference Board, which published report, attributed the decline to consumer worries over the job market and business conditions.
Bank of England Governor Mervyn King, in a statement to the Treasury Select Committee on Tuesday, touched on the situation of global demand.
While King sees continued improvements in the financial market, underlying economic conditions are more troubling.
The global recovery is still fragile, particularly in the euro zone.
Without out a pick up in external demand for their goods and services, said King, many countries will continue to experience weak recoveries.
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