Chevron Corporation (CVX), Exxon Mobil Corporation (XOM): Oil Falls Most Since November on Fed Comments

Page 1 of 2

NEW YORK (AP) — Oil was swept up in the broad sell-off in stocks and bonds Thursday, as a combination of weak Chinese manufacturing data and the Federal’s Reserve’s shifting stance on economic stimulus rattled energy markets.

Chevron Corporation (NYSE:CVX)

Oil had its biggest one-day price drop since November. U.S. benchmark oil for July delivery sank $2.84, or 2.9 percent, to finish at $95.40 a barrel in New York. Gasoline futures fell more than 3 percent.

On Wednesday Fed chairman Ben Bernanke suggested that he was optimistic about the U.S. economy — and that the Fed might start scaling back its massive $85 billion-a-month bond-buying program this year if conditions continue to improve. The Fed could end the program by the middle of next year, Bernanke said.

The Fed program has kept borrowing costs near historic lows for consumers and business. It has also helped boost the equities and energy markets.

Stocks and bonds sold off immediately after Bernanke’s comments. Oil didn’t react much because Bernanke spoke just as U.S. energy markets closed Wednesday.

Lower stocks and a stronger dollar put pressure on oil prices. Once trading opened in Asia Thursday oil fell sharply, in tandem with Asian stock markets. Bernanke’s comments also gave a boost to the dollar. Oil traders look to the stock market as a measure of confidence in the U.S. economy, while a strong dollar makes oil more expensive for holders of other currencies.

The Dow Jones industrial average fell 354 points, or 2.3 percent, Thursday to close at 14,758. Shares of Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), both Dow components, fell by more than 2 percent. The euro slipped to $1.3197 from $1.3274 in New York a day earlier. The yield on the benchmark 10-year note rose to its highest level since August 2011.

Also weighing on oil prices was a survey showing a slowdown in manufacturing in China. HSBC Holdings plc (ADR) (NYSE:HBC)‘s preliminary purchasing managers’ index fell to a nine-month low of 48.3 in June, down from 49.6 in May. Numbers below 50 indicate a contraction.

With mature economies like Europe and the U.S. struggling to expand at a steady pace, China and emerging markets have accounted for most of the growth in oil demand over the past several years.

“A weakening in Chinese industrial activity could easily translate to a reduced flow of products exports out of the US Gulf,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a daily report.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!