* U.S. consumer confidence dips; awakens double dip fears
* Coming Up: API U.S. oil inventory report 2030 GMT
(Updates prices and details throughout.)
By Joshua Schneyer
NEW YORK, July 27 (Reuters) - Oil prices fell by 1.9
percent on Tuesday after data showed U.S. consumer confidence
plunged to its lowest level in five months, prompting investors
to sell off riskier assets including oil and equities.
The confidence index fell in July to the lowest level since
February on worries about a stagnant job market in the world's
top economy. []
The data stoked fears that a U.S. economic recovery was
stalling, and prompted U.S. benchmark oil prices <CLc1> to back
down sharply from a new 11-week high of $79.69 a barrel earlier
Tuesday. Crude settled down $1.48 a barrel to $77.50.
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TECHNICALS-U.S. oil to rally toward $81/bbl
[]
Graphic on the technical outlook:
http://link.reuters.com/tyv79m
Graphic on the correlation of equities and commodities:
http://link.reuters.com/vyv79m
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U.S. stocks fell, giving up earlier gains, and the U.S.
dollar firmed against a basket of foreign currencies, an
indication investors were piling into safe havens, such as
Treasury bonds. [] []
Oil fell "on a technical reaction to not being able to hold
near $80 a barrel. We turned lower this morning on the bad
consumer confidence number, which also hit equities," said
Addison Armstrong of Tradition Energy in Stamford,
Connecticut.
ICE Brent <LC0c1> fell $1.37 to settle at $76.13 a barrel.
Rising oil production capacity in the Gulf of Mexico after
Tropical Storm Bonnie fizzled over the weekend without damaging
infrastructure also weighed on oil prices, analysts said.
[]
Offshore producers in the U.S. portion of the Gulf of
Mexico had cut regional crude output by 52 percent on Saturday
to brace for Bonny. Only 15 percent of crude production
remained shut in on Tuesday, and it was expected to be fully
restored by Wednesday, according to a government estimate.
[]
DOUBLE-DIP FEARS
Yale University economist Robert Shiller, a well-known
prognosticator in real estate markets, told Reuters Insider on
Tuesday that he expects the U.S. economy to enter into a
double-dip recession as growth stalls. []
"For me, a double-dip is another recession before we've
healed from this recession ... the probability of that kind of
double-dip is more than 50 percent," Shiller said.
As oil prices fall below $80, "a further drop cannot be
ruled out as people will point to a double-dip recession and a
Chinese (demand) slowdown," said Eugen Weinberg, head of
commodities research at Commerzbank in Frankfurt.
Oil prices have been testing a potential run over $80 a
barrel after trading in the $70 to $80 range since early June,
analysts said.
Some technical analysts, who study price charts for clues
to future direction, think oil prices could still break through
$80 a barrel following a breach of the key 200-day moving
average level last week.
Prices also fell on Tuesday as analysts expected data to
show that oil product stocks rose in the United States last
week, in spite of an expected dip in crude stocks.
U.S. crude oil inventories probably fell 1.6 million
barrels last week, an updated Reuters survey showed, but
supplies of distillate fuel, including diesel, may have climbed
for the ninth consecutive week and gasoline for the fifth, even
as summer demand peaks. []
Gasoline <RBQ0> and heating oil <HOQ0> for September
delivery fell by around 2 percent each on Tuesday. The
front-month contracts expire on Friday.
(Additional reporting by Robert Gibbons in New York, Emma
Farge in London and Alejandro Barbajosa in Singapore; Editing
by Marguerita Choy)
