Oil edges down toward $77 in European trade amid economic uncertainty

Oil moves down near $77 amid economic uncertainty

Oil prices edged down toward $77 a barrel on Friday after a drop in many stock markets and amid concern about the strength of the global economic recovery.

By early afternoon in Europe, benchmark crude for December delivery was down 26 cents to $77.20 a barrel in electronic trading on the New York Mercantile Exchange, recovering from $77.07 earlier in the day. The contract gave up $2.12 to settle at $77.46 on Thursday.

Crude prices were dragged down by uncertainty about the economic outlook, including concerns about deflation and a possible double-dip recession.

Oil has seesawed between $76 a barrel and $82 for about a month as the dollar — whose fall this year has help boost crude prices from $32 in December — stabilized somewhat during the last few weeks. Investors often buy commodities such as oil as a hedge against a weaker dollar and inflation.

An analysis by Petromatrix on Friday said the past four weeks have seen a pattern of “a rally on Monday/Tuesday on the Dow and dollar hype and a correction in the second half of the week after the reality check of the weekly oil statistics showing no improvement in demand.”

It said $80 a barrel “has proven to be a very strong level of resistance but until now $77 a barrel has also been a strong level of support.”

“We view this sideways pattern as sustainable going forward through the balance of this year,” said Galena, Illinois-based Ritterbusch and Associates in a report.

On Thursday, the U.S. Labor Department said employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures. However, some analysts expect Asian economic growth, led by China, to help offset a sluggish recovery in developed countries.

In other Nymex trading, heating oil fell 1.12 cents to $1.9852 a gallon. Gasoline for December delivery was down 0.44 cents to $1.9651 a gallon. Natural gas for December delivery dropped 5.30 cents to $4.289 per 1,000 cubic feet.

In London, Brent crude for December delivery fell 22 cents to $77.42 on the ICE Futures exchange.

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Associated Press Writer Alex Kennedy in Singapore contributed to this report.