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Oil, Gasoline Tumble as World Bank Predicts a Deeper Recession
Economic recovery may take longer than predicted
Crude oil fell more than $2 a barrel and gasoline tumbled after the World Bank said the global recession will be deeper than forecast, bolstering concern that fuel consumption will remain depressed. Oil dropped 3.8 percent after the bank projected the world economy will contract 2.9 percent this year, more than its previously forecast decrease of 1.7 percent. Prices also declined as the dollar strengthened, reducing the appeal of commodities as an alternative investment. “We’re lower because reality is asserting itself,” said Chip Hodge, who oversees a $9 billion natural-resource-company bond portfolio as managing director at MFC Global Investment Management in Boston. “Prices have rallied in anticipation of an economic recovery. Now it looks like the recovery will take longer and be less steep that was previously thought.”
Crude oil for July delivery fell $2.62 to $66.93 a barrel at 2:55 p.m. on the New York Mercantile Exchange, the lowest settlement since June 3. It was the biggest one-day decline since May 15. Prices, up 50 percent this year, have dropped 8.6 percent from a seven-month high of $73.23 reached on June 11. Futures for July delivery expired today. The more-active August crude oil contract slipped $2.52, or 3.6 percent, to settle at $67.50 a barrel. Gasoline for July delivery declined 6.47 cents, or 3.4 percent, to end the session at $1.8597 a gallon in New York. It was the lowest settlement since May 26.
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