Oil slips after data points to tepid U.S. recovery

updated 11:34 a.m. ET Nov. 24, 2009

NEW YORK - Oil prices fell near $76 a barrel Tuesday with new data showing a slow U.S. economic recovery and consumer confidence that remains lukewarm at best.

The dollar also gained against other major currencies, which can keep energy prices in check.

By midmorning, benchmark crude for December delivery fell $1.41 to $76.15 a barrel on the New York Mercantile Exchange.

The Commerce Department said the economy grew at a rate of 2.8 percent between July and September, short of estimates for 3.5 percent growth released just a month ago. Americans are not spending much, commercial construction was weak, businesses trimmed inventories.

The lack of consumer spending was partly explained in another report released Tuesday.

Americans' confidence in the economy improved slightly in November from October, but shoppers remain gloomy heading into the holiday shopping season, according to the monthly survey released by the Conference Board.

The lack of industrial and consumer activity has played out in weekly oil inventory reports from the Energy Department, with supplies of crude in storage growing.

The next weekly report arrives Wednesday, and expectations are that crude and gasoline supplies grew again last week.

With oil being bought and sold in the U.S. currency, investors holding euros or other currencies can buy more oil when the dollar falls.

Crude prices rose Monday when the dollar fell. On Tuesday, the dollar gained against the euro, yen, and British pound. Oil prices fell as much as 2 percent.

Crude has bounced between $76 a barrel and $82 for more than a month as a weakening dollar offsets concerns about tepid consumer demand. Oil often trades inversely to the strength of the dollar as investors buy commodities as a hedge against inflation.

"The ceiling has been set by weak refining margins, lackluster demand and a global economic recovery that is expected to be sluggish," Societe Generale said in a report.

In other Nymex trading, heating oil fell about 3 cents to $1.9502 a gallon. Gasoline for December delivery dropped 2.78 cents to $1.9516 a gallon. Natural gas for December delivery fell 7.2 cents to $4.40 per 1,000 cubic feet.

In London, Brent crude for January delivery dropped 92 cents to $76.54 on the ICE Futures exchange.

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