On the release of new data of weaker than expected US economic growth fuelling concerns of energy demand, oil prices have fallen after a day of recovery. New York's main oil futures contract, light sweet crude for September delivery, dipped by over 2.5 dollars to settle at US$124. In London, Brent North Sea crude for September delivery plunged by over 3 dollars to US$124.7.
The Commerce Department reported that US economy grew an annualized 1.9% in Q2, missing market expectations of 2.3% growth. This is the first time the US economy has slid into the red since the 2001 recession. The department has down revised Q1 by 0.1 percentage point, from 1.0 percent, and lowered 2007 Q4 growth to a 0.2% contraction from a prior estimate of a 0.6% gain.
Crude has plunged by US$23 since reaching a record peak above US$147 on July 11. However, crude spiked by more than four dollars on news of 3.5 million barrel drop in US gasoline inventories in the week ended July 25, and a shock announcement by Israeli Prime Minister Ehud Olmert that he would step down in September, casting a shadow over Middle East peacemaking.