World oil prices fall below $67

SINGAPORE – Oil prices sank below $67 a barrel yesterday on expectations of weak demand after the World Bank forecast a deeper recession this year.

Benchmark crude for August delivery fell 52 cents to $66.98 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, it dropped $2.52 to settle at $67.50.

The July contract, which expired Monday, dropped $2.62 to settle at $66.93.

A drop from an eight-month intraday high of $73.23 earlier this month accelerated after the World Bank said it expected the global economy to shrink by 2.9 percent this year, much worse than its March prediction for a contraction of 1.7 percent.

The bank also lowered its 2010 growth forecast to 1.7 percent from 2.0 percent.

The bank’s more pessimistic outlook helped puncture the growing market sentiment that massive global fiscal stimulus could spark growth by the end of the year.

The Dow Jones industrial average fell 2.4 percent on Monday after a 3 percent drop last week.

“Financial markets were expecting a quicker recovery, so for the World Bank to make such a large revision down surprised people,” said Ben Westmore, an energy analyst with National Australia Bank in Melbourne.

Investor expectations of growing crude demand from developing economies will likely keep prices from falling below $60 a barrel, Westmore said.

In other Nymex trading, gasoline for July delivery fell 1.47 cents to $1.85 a gallon and heating oil dropped 1.28 cents to $1.71. Natural gas for July delivery slid 4.3 cents to $3.89 per 1,000 cubic feet.

In London, Brent prices fell 58 cents to $66.40 a barrel on the ICE Futures exchange. - AP