Price of oil down 10% on economy woes

OIL prices dropped nearly $1 to below $60 a barrel yesterday.

Prices were set for the biggest weekly fall since January as economic concerns sent investors seeking safer havens.

US crude fell 98 cents to $59.43 a barrel, while London Brent crude traded down $1.05 to $60.05 a barrel.

Mounting worries that a rebound in the global economy may not be coming soon enough to spur flagging fuel demand has sent prices down about 10% this week.

Oil prices fell in six of the last seven trading sessions.

“The mood has changed and people are losing confidence about the economic recovery,” said Simon Wardell of Global Insight.

“We are in one of those phases where no matter what happens in other markets, oil will go down.”

US consumer sentiment wilted in early July to the weakest since March, the Reuters/University of Michigan Surveys of Consumers showed, adding to the recession worries.

The report helped drag down US stocks and helped push up the dollar and the yen, traditional safe-haven plays when risk aversion grows.

Investors have also been cautioned by moves by the US government to reign in speculation in energy and metals markets.

Bart Chilton, a commissioner for the US Commodity Futures Trading Commission, said that the agency would move aggressively and could implement new rules by late October or November.

A report by the International Energy Agency forecast demand would shrink this year but predicted oil consumption would grow by 1.7% in 2010, led by rising use in emerging economies as the developed world recovers from recession.

Slumping demand helped push up fuel inventories in the US, the top oil consumer last week, according to a US government report released on Wednesday, with distillate stockpiles hitting near 25-year highs.