Oil prices sank nearly 6 percent today with more signs emerging that consumers are cutting back where they can, notably on energy costs.
Benchmark crude for September delivery fell $3.89 to $63.34 a barrel on the New York Mercantile Exchange. In London, Brent prices fell $3.22 to $66.66 a barrel on the ICE Futures exchange.
The summer driving season has been a bust for industries that rely heavily on summer travel because Americans are staying very close to home. But industries have cut back as well, shuttering factories that consume a lot of energy and laying off workers.
Consumer confidence has been rattled, even though there are some indications of improvement in areas like housing.
The government reported today that orders to U.S. factories for big-ticket durable goods plunged in June by 2.5 percent, the largest amount in five months. The figure was much larger than the 0.6 percent decline economists had expected and was the biggest setback since a 7.8 percent fall in January.
Early in the recession, consumers began cutting back on energy costs and that has continued throughout the year.
The Energy Information Administration reported that crude supplies in the U.S. grew by 5.1 million barrels. That’s about 18 percent above last year’s levels, showing how much unwanted crude is in storage.
The Federal Highway Administration recently reported that demand has edged slightly higher for gasoline, given that gas is so much cheaper than last year. But the shift in behavior by motorists this summer is clear.
Gasoline supplies have risen by 11.4 million barrels over the past six weeks. (AP)
