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Oil falls on disappointing economic news

Oil falls on disappointing economic news

Oil prices fell Friday after earnings reports from two U.S. banks disappointed investors and a survey showed that consumers are becoming more pessimistic.
Benchmark crude for August delivery slid $1.08 to $75.54 a barrel in midday trading on the New York Mercantile Exchange.
The Dow Jones industrial average fell about 200 points, or 1.9 percent, by midday, and other major market indexes were also down more than 2 percent
Stocks fell further after a twice-monthly survey from the University of Michigan and Reuters found that consumers' gloom is increasing. An index of consumer sentiment compiled from the survey fell to 66.5 in early July from 76. That was a bigger drop than expected.
"Confidence remains unusually weak and that the slowdown in the economic recovery that we always expected has begun," said Paul Dales, U.S. economist for Capital Economics.
Oil has traded around $77 this week as mixed signals from second-quarter U.S. corporate earnings reports and economic indicators suggest an uneven recovery.
Crude traders often look to stock markets as a barometer of overall investor sentiment.
"Oil remains attached to equities for now and as a result, economic guidance should continue to rule," Ritterbusch and Associates said in a report.
Global oil consumption gains this year have been led by developing countries, especially China, the world's third-largest economy. China said Thursday its gross domestic product expanded by 10.3 percent in the second quarter from a year earlier, down from 11.9 percent growth in the first quarter.
"Chinese oil demand continues to scale new highs," Barclays Capital said in a report. "China remains the single largest contributor to global oil demand growth this year."
"Market fears of an imminent Chinese slowdown may be a bit overblown," it added.
In other Nymex trading in August contracts, heating oil lost 0.14 cent to $2.0169 a gallon, gasoline fell 0.9 cent to $2.0517 a gallon and natural gas fell 4.5 cents to $4.541 per 1,000 cubic feet.
In London, Brent crude fell 66 cents to $75.53 a barrel on the ICE Futures exchange.
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Associated Press writers Pablo Gorondi in Hungary and Alex Kennedy in Singapore contributed to this report.