Commodity Corner: Oil Plunges on China, U.S. Economic Indicators

A significantly less optimistic economic outlook for China, coupled with declining consumer confidence in the U.S., contributed to a $2.31 drop in the price of a barrel of crude oil Tuesday.

The front-month contract for oil settled at $75.94 after The Conference Board modified a key indicator for China's economy. The business research organization reported the April Leading Economic Index (LEI) for China's economy actually shows 0.3% growth in that country, rather than the 1.7% it reported on June 15. The initial 1.7% figure stemmed from a calculation error, the board explained. The updated April figure suggests a slowdown in China's economy; LEI figures for February and March were 0.4% and 1.2%, respectively.

The organization's Consumer Confidence Index, a monthly survey of 5,000 U.S. households, also revealed that Americans are neither enthusiastic about business conditions nor their future job prospects. According to the June survey, U.S. consumer confidence fell 9.8 points over the past month from 62.7 in May to 52.9 in June. The finding contrasts with three straight months of gains observed by The Conference Board from March through May.

Oil traded from $75.28 to $78.32 Tuesday.

Tuesday also was a down day for August natural gas futures, which declined 18 cents to $4.55 per thousand cubic feet. The discouraging consumer confidence index for June, along with the expectation that Tropical Storm Alex would not impact U.S. natural gas infrastructure, placed downward pressure on the commodity. The intraday range for natural gas was $4.55 to $4.76.

The price of a gallon of gasoline slipped from $2.14 to $2.07. Gasoline topped off at $2.13 and bottomed out at $2.06.