RTTNews - Crude oil plunged on Monday as the World Bank's discouraging economic forecast led to worries over energy demand. The drop took crude to its lowest close in 19 days.
Light sweet crude fell to $66.93, a drop of $2.62 for the session. Prices hit as low as $66.25.
The July contract expired at the end of the session. The more-actively traded August crude contract fell $2.52 to $67.50 per barrel.
The World Bank reduced its global GDP estimate as well as the outlook for most other economies and warned of a large decline in international capital flows amidst financial market fragility and recession.
The Washington-based lender now forecasts the world economy to shrink 2.9% this year, larger than its earlier prediction of a 1.7% decrease. In a report released on June 11, the lender had predicted the economy to shrink close to 3% in 2009. Global GDP is forecast to rebound with 2% growth next year and 3.2% by 2011.
The greenback saw strength against its European rivals on Monday in New York, adding to oil's hedge value. Traders often turn to commodities in times of a weak dollar.
There was no major economic data in the U.S. as traders looked ahead to the Federal Open Market Committee's two-day meeting, which begins tomorrow. An interest rate decision is expected Wednesday.
On Friday, oil lost $1.82 to settle at $69.55 per barrel and lost $2.49 for the week. Energy Information Administration data on Wednesday showed crude oil inventories decreased by 3.9 million barrels in the week ended June 12, but gasoline stocks increased by 3.4 million.
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