SINGAPORE — Oil prices fell to near US$77 a barrel Tuesday in Asia as investors mulled whether the global economy is strong enough to justify extending a four-week rally.
Benchmark crude for July delivery was down 57 cents to $77.25 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained 64 cents to settle at $77.82 on Monday.
Oil has jumped from $64 a barrel on May 25 on optimism Europe’s debt crisis won’t stymie the global economic recovery.
Goldman Sachs cut its crude forecasts, but still expects prices to rise this year as the global economy grows an estimated 4.9 per cent in 2010. Goldman now expects prices to rise to $87 a barrel in three months, down from last month’s forecast of $96.
Prices advanced to as high as $78.92 a barrel Monday on investor expectations China’s move over the weekend to strengthen its currency would boost crude demand.
Societe Generale said it expects the yuan to gain between 3 per cent and 5 per cent by the end of the year, not enough to spark significant new consumption in China.
“Chinese demand has already exceeded expectations; it has been strong and we had already forecast it to continue that way,” the firm said in a report. “We simply do not expect a modest appreciation in the yuan to make any appreciable difference in demand.”
Societe Generale forecasts crude will average $80 a barrel in the third quarter and $85 in the fourth.
In other Nymex trading, heating oil fell 1.04 cents to $2.1355 a gallon, gasoline dropped 0.48 cent to 2.1380 a gallon and natural gas was down 1.9 cent at $4.854 per 1,000 cubic feet.
Brent crude was down 61 cents at $78.20 on the ICE futures exchange.
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