Crude-oil futures settled 2 cents lower on Monday, shedding sizable gains amid broad macro-economic concerns.
Early gains were blunted by economic worries that span the globe.
China, the world's second-biggest oil consumer after the U.S., and the engine for oil-demand growth, is sending mixed signals. China's crude oil imports rose in January by a healthy 7.4% from a year earlier, but early indications show manufacturing activity dropped in February to a level that barely indicates a growing economy.
In Europe, uncertainty over the outcome of Italy's election created doubts about prospects for economic reforms. Those worries hit the euro and pumped up the dollar, driving some investors out of dollar-based commodities, like oil, analysts said.
In the U.S., meantime, the latest "economic data is not great" said Kyle Cooper, managing partner at IAF Advisors in Houston, and helped turn equities weaker, removing another prop for oil prices.
"As go equities, so goes crude," as market sentiment switched to a risk-off mode, he said.
Recent news from regional Federal Reserve banks discouraged buyers. The Chicago Fed said Monday that lower industrial production sent its National Activity Index down to a reading of negative 0.32 in January from plus 0.25 in December. Texas-area manufacturing activity barely grew in February, the Dallas Fed reported, with the Business Activity Index at 2.2 in February, down from 5.5 in January.
The economic doubts crushed crude's attempts to shake-off a significant sell-off last week. Traders again are refocused on lofty crude oil inventories at a time of weak demand from refineries and economical signals that don't bode well for oil-demand growth.
"It's got to be concerning for the bulls that the early gains couldn't hold," said Mr. Cooper.
Light, sweet crude-oil futures for April delivery on the New York Mercantile Exchange settled 2 cents lower, at $93.11 a barrel after trading in a broad range of $92.69 to $94.46 a barrel. Last week, the contract fell 3.4%, the worst weekly performance for front-month Nymex crude since Oct. 26, 2012.
April ICE Brent crude oil settled 34 cents lower, at $114.44 a barrel, after trading in a range of $113.73 to $115.87 a barrel. The contract lost 3% last week, the biggest drop since the week ended Dec. 7, 2012.
Last week, the federal Energy Information Administration reported U.S. crude oil stocks rose more than expected to put stocks at a level sufficient to meet nearly 27 days of current low demand from refiners. That was the highest level of inventory cover since March 1994, and put crude oil stocks outright at their highest level for this time of year on EIA data beginning in 1982.
Early forecasts from analysts show EIA data due out Wednesday are expected to show a further 2.3 million barrels in crude stocks, with little change in refinery activity.
March-delivery reformulated gasoline blendstock futures settled down 1.85 cents, at $3.0611 a gallon ahead of the contract's expiration Thursday.
Front-month prices have gained more than 40 cents a gallon since mid-January amid tight inventories in the Northeast U.S. Price volatility is common at this time of year as refiners walk a fine line between producing enough fuel to meet the winter-grade specification for the March contract before switching to the costlier, cleaner-burning summer-grade fuel that meets the April contract specifications.
March-delivery heating oil futures settled 0.53 cent lower, at $3.0989 a gallon. The contract also expires Thursday.
Copyright (c) 2012 Dow Jones & Company, Inc.
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