Oil slides to near $67 on grim World Bank forecast

Oil prices slid to near $67 a barrel Tuesday on expectations of weak demand after the World Bank forecast a deeper global recession this year. Sharp declines in Asian stock markets Tuesday, coming after a drop on Wall Street on Monday, added to selling pressure. Benchmark crude for August delivery fell 43 cents to $67.07 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, it dropped $2.52 to settle at $67.50. The July contract, which expired Monday, dropped $2.62 to settle at $66.93 a barrel. A drop from an eight-month intraday high of $73.23 earlier this month accelerated after the World Bank said it expected the global economy to shrink by 2.9 percent this year, much worse than its March prediction for a contraction of 1.7 percent. The bank also lowered its 2010 growth forecast to 1.7 percent from 2 percent. The World Bank's more pessimistic outlook helped puncture the growing market sentiment that massive global fiscal stimulus could spark growth by the end of the year. Benchmark stock indices in Japan, Hong Kong and South Korea tumbled nearly 3 percent Tuesday. On Monday in New York, the Dow Jones industrial average fell 2.4 percent on Monday after a 3 percent drop last week. "Financial markets were expecting a quicker recovery, so for the World Bank to make such a large revision down surprised people," said Ben Westmore, an energy analyst with National Australia Bank in Melbourne. Investor expectations of growing crude demand from developing economies will likely keep prices from falling below $60 a barrel, Westmore said. In other Nymex trading, gasoline for July delivery fell 0.58 cent to $1.85 a gallon and heating oil was steady at $1.73. Natural gas for July delivery was steady at $3.94 per 1,000 cubic feet. In London, Brent prices fell 41 cents to $66.57 a barrel on the ICE Futures exchange.